• On the issue of “Related person” the L.A.A in his impugned order at para 8 to 11 had discussed in detail. On perusal of statements of facts of appeal and other records, there is no dispute on the fact that M/s. Union Switch & Signal Pvt. Ltd. (presently known as Ansaldo STS Transport Systems India Pvt. Ltd.) Bangalore i.e. the appellant is a 100% subsidiary of M/s.Ansaldo Signal N.V. Netherlands. It is evident from the appellant's own letter dt. 20.5.2005 addressed to DC Customs (SVB) that M/s.Ansaldo Signal Netherlands under consolidation process acquired 7 companies under Ansaldo Signal NV as a single Global company. These companies are located across the world in USA, Canada, Korea, Maxico, Australia, India, Malaysia, Italy, France, China, Hong Kong, Venenzuela, U.K. Swedan and all these 7 companies are 100% owned subsidiaries of Ansaldo Signal NV Netherlands.
• In view of the above undisputed facts, the appellants and suppliers are related persons and we uphold the adjudicating authority and lower appellate authority's finding that the appellants and the foreign supplier are “related persons” in terms of Rule 2 (2) (vi)of CVR 1988.
• As per Rule 4 (2) (c) of CVR the transaction value is acceptable only where the sale does not involve special discount limited to exclusive agent/person. In the present case, it is established beyond doubt that the discounts offered are exclusive discounts only to the appellant who is 100% subsidiary of the principal company. Therefore, the appellant's contention that they are eligible for discount of upto 30% for the transfer price is not acceptable. Accordingly, we hold that the L.A. order of the rejection of discount and loading of invoice price to different % for each imports made from their related suppliers is liable to be upheld.
• As regards the addition of lump sum fee and royalty amount to the value of imported goods under rule 9 (1) (c) of CVR the appellants main contention is that these payments are not addable on the imported goods as it is not condition of sale of imported goods. The lower authority dealt this issue in detail at paras 18 to 23 of OIA and gave clear findings on the appellant's arguments and citations relied by the appellants. The adjudicating authority in his findings at page 15, 16, 17 and 18 of OIO brought out at length on lumpsum payment made towards Technical Knowhow of USD 10,00,000 and royalty of @ 5% made to their principal supplier U.S.S and also explained various clauses of agreements
• The ratio of the Apex Court decision in Essar Gujarat case is squarely applicable to the present case as the technical knowhow, lump sum payment, royalty are part of condition of executing the contract with Railways and certainly it is a condition of sale of imported Microlock-II components to the appellant falls within Rule 9 (1) (c) of CVR and includible in the invoice price of imported goods.
• the appellants and the suppliers are related in terms of Rule 2 (i), 2(2) (iv) and 2 (2) (v) of CVR. The adjudication order of rejection of discount and declared value and redetermination of value under Rule(8) and loading of price is upheld. The lump sum fee and royalty payments made to USS and CSEE are includible in the value of imported goods as arrived by the L.A. The re-determination of value of past imports of 1999-2001 ordered by LA is upheld.
• Before parting, we record our appreciation to the both original Adjudicating Authority and the Lower Appellate Authority for their well reasoned OIO dt. 21.4.2006 of 21 pages and OIA dt. 23.10.2006 of 32 pages meticulously and systematically discussed each issue threadbare in their findings.
(See 2016-TIOL-99-CESTAT-MAD)
