The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), set aside rejection on transaction value on absence of evidence on relation between seller and buyer to influence price of imported goods.
M/s Indian Farmers Fertilizers Co Operative Limited (IFFCO), and M/s Krishakbharti Cooperative Ltd (KRIBHCO), the appellants both are a Multistate Co-operative Society primarily engaged in manufacturing of Fertilizers and distribution of fertilizers. On the basis of intelligence gathered by the Department of Revenue Intelligence (DRI), the imports of Urea by M/s IFFCO and M/s KRIBHCO were taken up for analysis and it was revealed that while the prevailing import price of Urea is around US Dollar 410 Per MT.
Both the appellants are importing Urea from M/s Oman India Fertiliser Company, Oman (OMIFCO).Further, the import of Urea and Ammonia from the said company was on the basis of a long term Urea Off- take Agreement (UOTA) and an Ammonia Off-take agreement (AOTA) between the Government of India(GOI) and OMIFCO. DRI initiated investigation into the imports made by the both assessee during the course of which, it recorded statements of some employees of the assessee and demand and penalty was imposed.
Manish Jain, Counsel appearing for the Appellant submitted that in the present case, alleged relationship between the parties has not influenced the price in any manner. Rule 3(3)(a)of the Customs Valuation Rules, 2007 provides that the transaction value shall be accepted when examination of the circumstance of the sale of imported goods indicates that the relationship did not influence the price.
B K. Singh, Counsel appearing for the Appellant M/s KRIBHCO submitted that under the provisions of Customs Valuation Rules 2007, buyer (GOI) and Seller (OMIFCO) cannot be called related persons. And if they cannot be called related person, the department had not examined as to why the declared value can be rejected.
Ajay Jain and S. K. Mathur, (Special Counsel) for the Revenue, on the other hand reiterated the findings of the order.
A Coram consisting of Ramesh Nair, Judicial Member and Raju, Technical Member observed that “From the forging, it is clear that even if it is assumed that the buyer and seller are related in terms of Rule 2 (2) of valuation Rules, 2007 read with explanation II of said Rule, the price at which the goods were purchased from OMIFCO is the true transaction value and not influenced by their relationship.”
“In the present matter Department has also not produced any evidence to show that the relationship between the parties has influenced the price. Therefore, we find that the reasons for rejecting the transaction value is not in consonance with law and therefore liable to be set aside” the Tribunal said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to TaxscanAdFree. Follow us on Telegram for quick updates.
