By TIOL News Service

CHENNAI, SEPT 06, 2018: THE respondent is an importer of hydraulic components like valves, pumps and filter etc., for the manufacture of hydraulic systems for wind industries, from their related group companies which are outside the country.

The Customs Authorities, Chennai, prima facie found that the petitioner (importer) and the Foreign Supplier are related under Rule 2(2) of the Customs Valuation (Determination of Valuation of Imported Goods) Rules, 2007.

Accordingly, the assessing authority passed an order for provisional assessment of the imports with 1% extra duty deposit.

Aggrieved with this order, the department filed an appeal and the Commissioner(A) set aside the order and remanded the matter to the Adjudicating Authority.

The CESTAT held that the order of remand by the Appellate Authority was unjustified.We reported this order dated 16.08.2017 as - 2017-TIOL-4485-CESTAT-MAD.

The Tribunal found the Appellate authority had compared the prices of other producers like M/s.Gamesa and had come to a wrong conclusion. The Tribunal therefore, upheld the order of the original authority, which held that the price variation for capital goods and components is because of the supply of assembled products to M/s.Gamesa Wind, whereas, the imports made by the appellant in SKD/CKD products, required some assembling process to make for the finished products.The Tribunal also held that Article 19 of the agreement, appears only to be a standard clause to fix the liability for discharging Government tax and duties etc., and that it is not a condition for sale. The Appellate Tribunal also held that the grounds on which the appeal was remanded was not a part of the show cause notice nor was it raised in the appeal, filed by the department before the Appellate Authority.

Revenue is in appeal against this order.

Article 19 of the Material Supply Agreement reads -

"All payments to be made by buyer to supplier hereunder will be net of all taxes, however, designated and levied by any state, local or Government agency. With respect to applicable taxes that are imposed in a transaction of this type, including without limitation, withholding tax, buyer shall collect, report and pay to the relevant taxing authority and indemnify supplier for any liability relating to such taxes and charges".

The High Court considered the submissions and observed -

++ The Tribunal has analysed the entire facts as the final fact finalising authority and that cannot be said to be unreasonable or wrong.

++ The conclusion arrived at by the Tribunal that Article 19 only mandates that the respondent will be liable to pay all the tax that will imposed on the transaction has nothing to do with the payment or a condition of sale, is a possible view, which does not require any interference.

Concluding that the order of the Tribunal is not perverse, the Civil Miscellaneous appeal was dismissed.

(See 2018-TIOL-1825-HC-MAD-CUS)