Custom, Excise & Service Tax Tribunal
M/S. Sgl Carbon India Pvt. Ltd vs Commissioner Of Customs (Imports) on 18 October, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPLICATION NO. C/S/1271/12
IN APPEAL NO. C/480/12 Mum
Arising out of Order-in-Appeal No. 147/MCH/DC/SVB/2012 dated 27.02.2012 passed by the Commissioner of Customs (Appeals), Mumbai.
For approval and signature:
Honble Shri Ashok Jindal, Member (Judicial)
Shri. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
M/s. SGL Carbon India Pvt. Ltd.
:
Appellant
Versus
Commissioner of Customs (Imports)
Mumbai
Respondent
Appearance Shri S.N. Kantawala, Advocate for appellant Shri D.D. Joshi, Supdt (A.R.) for respondent CORAM:
Shri Ashok Jindal, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 18.10.2012 Date of Decision : 18.10.2012 ORDER NO.
Per : P.R. Chandrasekharan The appeal and stay application are directed against order-in-appeal No. 147/MCH/DC/SVB/2012 dated 27.02.2012 passed by the Commissioner of Customs (Appeals), New Custom House, Mumbai.
2. The appellant M/s. SGL Carbon India Pvt. Ltd. filed declaration under Rule 10 of Customs Valuation Rules, 1988/2007. In as much as the foreign supplier was related to the importer the valuation of the goods imported by the appellant from the foreign supplier was referred to the Special Valuation Branch, Mumbai for investigation. The Asst. Commissioner of Customs, Special Valuation Branch vide order dated 31.03.2006 concluded that the transaction value of the goods imported by the appellant from their principal in Germany has not been influenced by the relationship and accordingly, he directed that the transaction value be accepted for the purpose of assessment of customs duty. The said order was accepted by the Commissioner of Customs. After three years period, a review was called for and the review of the transaction was taken up. The Dy. Commissioner of Customs, GATT Valuation Cell, Mumbai observed that there was no change in invoice pattern/pricing method and the representation agreement, co-operation agreement and management service agreement has not brought any material changes affecting the invoice value of goods imported by the importer from all the related suppliers and, accordingly, he once again confirmed that the transaction value can be accepted for the purpose of customs valuation. The Revenue was aggrieved of the said decision and, therefore, they preferred an appeal before the lower appellate authority on the ground that the appellant is paying a royalty of 1.5% towards the use of trade mark calculated on net sales basis and, therefore, the royalty would be attributable to the goods imported and should be added to the value of the goods imported. The lower appellate authority on the basis of the appeal filed by the Revenue held as follows:-
It is proven fact that the relationship has been established between the importer and the supplier and the price appears to have been influenced on the basis of points raised by the Revenue on the grounds of appeals. It appears that the adjudicating authority has over looked the issue. The justification made by the respondent does not seem to be convincing. In view of the above, the revenue appeal succeeds and the adjudicating authority is directed to pass appropriate order in view of the points made in the ground of appeals. (emphasis supplied) It is against this order the appellant is before us.
3. The learned Counsel for the appellant submits that in the instant case, what the appellate authority has done is to remand the case back to the adjudicating authority when the appellate authority has no such power. The appellate authority has not given any positive findings how the relationship has influenced the price except for making the observation that it appears to have been influenced. In view of the above, he submits that on this ground alone the order-in-appeal needs to be set aside.
3.1 The learned Counsel further submits that in terms of trade mark agreement, the appellant is liable to pay the foreign supplier a licence fee @ 1.5% on net sales calculated on the basis of formula and as per the formula the net sales value is defined as gross sales value less commission, transport including ocean freight, insurance duties, taxes and other charges and costs of raw materials, parts, components, imported from Licensor and its subsidiary/affiliated company. Thus the basis for the calculation of the royalty clearly shows that cost of the imported material does not form part of the value on which royalty is paid. Therefore payment of royalty has nothing to do with the imports of components by the appellant from the foreign principal. In view of the above, he submits that the relationship between the two parties has not influenced the price of the goods imported and, therefore, the lower appellate authoritys finding in this regard is not sustainable in law.
4. The learned A.R. appearing for the Revenue reiterated the findings of the lower appellate authority.
5. We have carefully considered the submissions made by both the sides. As the issue lies in the narrow compass, we are of the view that the appeal can be disposed of at this stage itself. Therefore, after dispensing with the requirement of pre-deposit, we take up the appeal for consideration and disposal.
5.1 We find that the lower appellate authority has, without giving any findings on the points raised in the appeal by the revenue, remanded the case back to the adjudicating authority. The Commissioner (Appeals) does not enjoy the power of remand and, therefore, on this ground alone the impugned order is liable to be set aside.
5.2 We have also perused the terms and conditions of the licence agreement entered into by the appellant with the foreign principal. As per the terms and conditions of the said agreement, the royalty payment is for the use of trade mark and the cost of raw materials/components imported by the appellant from the foreign principal or from their subsidiary/affiliated companies (is excluded while computing royalty). In other words the royalty paid has no nexus either with the price of the imported components nor it is a condition of sale of the imported components. Therefore, the question of adding the royalty either under Rules 9(1)(c) / 10(1)(c) or 9(1)(d) / 10 (1) (d) of the Customs Valuation Rules, 1988/2007 does not arise and transaction value has to be accepted.
6. In view of the foregoing, we set aside the impugned order and allow the appeal with consequential relief, if any. The stay application is also accordingly disposed of.
(Pronounced in open Court) (Ashok Jindal) Member (Judicial (P.R. Chandrasekharan) Member (Technical) nsk 6