Custom, Excise & Service Tax Tribunal
Commissioner Of Customs And Service Tax ... vs M/S. Cmc Ltd on 7 February, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH
BANGALORE
Application(s) Involved:
C/CROSS/47/2011 in C/2340/2010-DB
Appeal(s) Involved:
C/2340/2010-DB
[Arising out of Order-in-Appeal No. 126/2010 dated 22/06/2010 passed by the Commissioner of Customs, Bangalore.]
For approval and signature:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER
HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER
1
Whether Press Reporters may be allowed to see 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 of the Order?
4
Whether Order is to be circulated to the Departmental authorities?
Commissioner of Customs and Service Tax BANGALORE-CUS
C.R. BUILDING, QUEENS ROAD,
P.B.NO. 5400,
BANGALORE - 560001
KARNATAKA
Appellant(s)
Versus
M/s. CMC LTD.
MATERIAL MANAGEMENT CENTRE,
CMC HOUSE, C-18, BANDRA KURLA COMPLEX, BANDRA (E),
MUMBAI.400 051
Respondent(s)
Appearance:
Mr. Pakshirajan, AR
For the Appellant
Ms. Neetu James, Advocate
For the Respondent
Date of Hearing: 07/02/2016
Date of Decision: 07/02/2016
CORAM:
HON'BLE SMT. ARCHANA WADHWA, JUDICIAL MEMBER
HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER
Final Order No. 20341 / 2016
Per : ASHOK K. ARYA
Both the parties have been heard in detail. The matter concerns with the valuation of the goods imported by the respondent viz., M/s. CMC Ltd., Mumbai.
1.1 The importer viz., M/s. CMC Ltd., imported the following goods through Air Cargo Complex, Bangalore, as per the prices declared in the bill of entry which is as given in the table below.
Description
Qty.
Unit price in US $
Total value in INR as declared in B/E
Invoice No.
Pre Processor Core Licences
48 set
3191.75
78,74,920
16-01331-11
HP Integrity BL860C 2p/4C 1.6/18 MB Proc
8 set
20085.75
82,59,506
16-01332-11
HP Integrity BL860C 2P/4C 1.6/18 MB Proc
8 set
13609.75
55,96,495
16-01333-11
HP SY Support Plus 24 SVC
1 set
38036.99
19,55,159
16-01334-11
Veritas Volume Manager LTU for Servers
12 set
20477.39
1,26,30,830
16-01335-11
1.2 Deputy Commissioner of Customs rejected the value declared by the import viz., M/s. CMC Ltd., Mumbai saying that discount is in the range of 87% to 97.35% and he allowed maximum discount of 55% on the HP list price goods covered under 5 invoices.
1.3 M/s. CMC Ltd., Mumbai, who are the respondents in this case went in appeal before Commissioner of Customs (Appeals), who set aside the Order-in-Original passed by the Deputy Commissioner of Customs, Air Cargo Complex, Bangalore who allowed only maximum discount of 55% on the list price, when the discount in the invoices in the range of 87-97.35%.
2. Revenue is now before this Tribunal challenging the order of Commissioner of Customs (Appeals).
2.1 Revenue has been represented by learned AR Shri Pakshirajan, who has mainly given the following submissions.
(i) Discount offered to the extent of 97.35% is abnormal and rejection of declared value by the original authority is legal and proper.
(ii) Importers did not prove that the discount of 97.35% offered by M/s. Hewlett Packard Sales (India) Pvt. Ltd. (HPI) is the normal discount which is offered to other importers at the same commercial and quantity level.
(iii) This import of M/s. CMC Ltd. cannot be compared with the imports claimed to have been made by CBEC with a discount ranging from 89.5 to 90%, when the transaction was involved to the extent of Rs.13.9 crores when compared to the present transaction of Rs.3 crores.
(iv) It is common in the international trade to allow higher discount, but it needs to be carefully examined in case to case basis. Abnormal or special discounts are covered under the exempted category of the Transaction Value Rule in the Customs Valuation Rules (CVR), 2007. 97.35% discount cannot be considered as normal discount.
(v) Commissioner (Appeals)s order is not fair and legally correct.
3. Respondent viz., M/s. CMC Ltd., Mumbai, has been represented by the learned advocate Ms. Neetu James, have mainly argued as follows:
A. IDENTICAL IMPORTS WERE ASSESSED ADOPTING THE DECLARED VALUE AND CLASSIFYING THE GOODS UNDER 8471
* The declared price is an agreed consolidated price commonly known as bundled price.
* It was a quotation of M/s. Hewlett Packard Sales (India) Pvt. Ltd. (HPI), which was accepted by M/s. ITC, who are their customers for the present goods.
* In terms of the purchase order placed by M/s. ITC on the respondents, they were to supply equipment for a price of Rs.9 crores including the customs duties. A portion of the equipment of the value of Rs. 4,79,90,644/- was meant for supply to the Bangalore Centre of ITC. The balance portion of the equipment of the value of Rs. 4,20,09,356/- was meant for supply to the Kolkata Centre of ITC.
* The equipment of the value of Rs. 4,20,09,356/- which was meant for supply to the Kolkata Centre of ITC, was imported by the Respondents through Kolkata Air Cargo vide Bill of Entry No. 536571 dated 26.12.2008. The said Bill of Entry was assessed by the Customs authorities at Kolkata Air Cargo classifying the imported goods under Chapter Heading 8471 and adopting the declared value. The above assessment is not challenged by the Department,when the Kolkata Customs under Bill of Entry No.536571 dated 26.12.2008 has accepted the declared value and classification of goods under CTH 8471 has attained finality. Having accepted the declared value and classification of the imported goods pertaining to purchase order dated 13.11.2008 while assessing the Bill of Entry No. 536571 at Air Cargo, Kolkata, the Department is now precluded from taking a different stand while assessing the identical goods covered under the same purchase order and meant for the same customer, when imported through Bangalore. In this regard, they placed reliance on the following decisions:
(a) CCE vs. Bal Pharma Ltd. reported in 2010 (259) E.L.T. 10 (S.C.)
(b) CCE, Allahabad Vs. Surcoat Paints (P) Ltd. reported in 2008 (232) E.L.T. 4 (S.C.)
(c) CCE, Vadodara vs. Gujarat State Fertilizers & Chem. Ltd. reported in 2008 (229) E.L.T. 9 (S.C.)
(d) Birla Corporation Ltd. vs. CCE reported in 2005 (186) ELT 266 (SC)
(e) Jayaswals Neco Ltd. vs. CCE, Nagpur reported in 2006 (195) E.L.T. 142 (S.C.)
(f) Jyothy Laboratories Ltd vs. CCE reported in 2007 (78) RLT 276 (Cestat-Bang.)
B. BASIS FOR DOUBTING THE TRANSACTION VALUE HAS BEEN DULY REBUTTED
* The respondents have produced back to back invoice and other contemporaneous documents like negotiations between HPI and ITC, back to back purchase orders, etc., clearly supporting the genuineness of the price declared in the documents. Respondents submit that the value declared by them in the bill of entry represent the true and correct value of the goods in question. From the documents submitted by them that the commercial nature of the transaction is clearly established and the declared prices fully satisfy all the criteria laid down in Section 14 of the Customs Act.
C. VALUE DECLARED BY THE RESPONDENTS IS THE CORRECT VALUE OF THE GOODS IMPORTED
* The discount percentages derived from the price list of HP start from as low as 45% and go upwards to 47.95%, 60%, 61% etc. for other items and not a uniform discount of 97.35%.
* In terms of Rule 3(2) of the Customs Valuation Rules, 2007, transaction value shall be accepted and can be rejected only in exceptional circumstances enumerated in the proviso to this sub-rule. In this regard they relied upon the following decisions:
i. Eicher Tractors Vs. CC 2000 (122) ELT 321(SC)
ii. Virat Enterprises Vs. CC 2001 (132) ELT 692
iii. Jindal Strips Ltd Vs. CC 2001 (173) ELT 570
iv. [Affirmed by Honble Supreme Court - 2003 (156) ELT A385 (SC)]
v. Polychem Ltd Vs. CC 2001 (135) ELT 1061
* The Respondents submit that as the exceptions enumerated in Rule 3(2) are absent in the instant case, the transaction value of the goods are not liable to rejected.
* Further the department has not demonstrated that contemporaneous imports were made at a higher price than that declared in the impugned invoices. They placed reliance on the following decisions:
i. CC Vs. South India Television Pvt. Ltd reported in 2007 (214) ELT 3 (SC)
ii. Varsha Plastics Pvt. Ltd. Vs UOI reported in 2009-TIOL-16-SC-
iii. CC Vs. JD Orgochem Ltd. reported in 2008 (226) E.L.T. 9 (S.C.)
D. HIGHER RATE OF DISCOUNTS ALLOWED IN NORMAL COURSE OF TRADE IN THE INTERNATIONAL MARKET
* The Respondent undertook supplies in INR to the Central Board of Excise and Customs where discounts of about 91% were allowed on HP price list. These discounted prices were accepted by the department when the goods were supplied by CMC to the CBEC thru Tata Consultancy Services (TCS).
* The Respondents submit that the burden of establishing prices through contemporaneous imports lies on the department. It is now well settled law that the burden of showing contemporaneous imports cannot be shifted to the importer. In this regard, reliance is placed on the following decisions:-
(a) CC, Mumbai Vs JD Orgochem Limited :2008 (226) E.L.T. 9 (S.C.)
(b) CC, Calcutta Vs South India Television Pvt Ltd : 2007 (214) ELT 3 (SC)
E. THE IMPORTED GOODS ARE RIGHTLY CLASSIFIED UNDER CTH 8471 49 00
* It is submitted that the classification of the imported goods under CTH 8471 is correct in view of Rule 2(a) of the General Rules for interpretation of Customs tariff which says that any reference in an article shall be taken to include a reference to that article presented unassembled or disassembled.
* It is further submitted that Note-2 of section XVI of the Customs tariff clarifies that parts of machines falling under 8471 shall be classified along with the machine itself.
* Note 5(c) to Chapter 84 of the customs tariff specifies that separately presented units of automatic data processing machines are to be classified in heading 8471. In the instant case, Cell Boards qualifies to be called as units for the purpose of said note and therefore should be classified under CTH 8471.
F. BUNDLED PRICES TO BE ASSESSED BASED ON THE TRANSACTION VALUE
* The entire transaction has been treated as a bundled or package deal where consolidated and single price has been approved upon for the goods covered by the impugned bill of entry though covered by five separate invoices. Such bundled prices have to be assessed based on the transaction value as long as it satisfies the requirements of Section 14 of the Customs Act, 1962 read with Rule 3 of the Customs Valuation Rules.
* It is quite common in international trade to negotiate package or bundled prices for a set of goods, even though such a bundled price may consist of goods requiring classification under different headings.
4. All the facts on record and the submissions of both the sides have been carefully examined. We find that impugned order by Commissioner (A) is quite elaborate. We have carefully gone through the discussions, analysis and the case laws quoted in the impugned order. The impugned order as concluded is as follows:
I am of the opinion that the transaction value declared by the appellant shall be accepted in view of the identical nature of goods with similar price supplied to CBEC; clearance of identical goods supplied from the same supplier at the same time for the same client at Kolkata Custom house; the goods being a package deal and negotiated price as evidenced by the various documents produced by the appellants; the declaration of value for insurance purposes and the judicial decisions on this count, other various judicial decisions of the higher judicial forums including the Honble apex court discussed supra holding that mere transaction value. In view of the foregoing discussions, i pass the following orders:
ORDER
30. I set aside the Order-in-Original No.187/2009 dated 21.7.2009 passed by the Deputy Commissioner of Customs (GR-5A), Air Cargo Complex, Bangalore and hold that the assessment be done as per the declared value in line with the assessments done in Kolkata Custom House. The appeal is allowed.
5. We find that there has not been sufficient evidence with the Department to challenge the declaration made by the respondents in their bill of entry dated 23.12.2008 where under they were clearing their subject goods. There is no basis with the department to have a different view on the assessment which was done for the identical goods by Kolkata Custom House, which was in line with the declaration filed by the respondents in their import documents at Bangalore Cargo Complex. As the fact stand, we agree with the impugned order passed by Commissioner (A) and Revenues appeal is therefore rejected.
(Order pronounced and dictated in open court) ASHOK K. ARYA TECHNICAL MEMBER ARCHANA WADHWA JUDICIAL MEMBER rv 3