No Evidence to show that relationship between parties has influenced price: CESTAT quashes differential Duty Demand
CESTAT quashes differential duty demand as there was no evidence to show that relationship between parties has influenced price
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed differential duty demand as there was no evidence to show that relationship between parties has influenced price. IFFCO and KRIBHCO both are a Multistate Cooperative Society primarily engaged in manufacturing and distribution of fertilizers. On the basis of intelligence gathered by the DRI,...
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed differential duty demand as there was no evidence to show that relationship between parties has influenced price.
IFFCO and KRIBHCO both are a Multistate Cooperative Society primarily engaged in manufacturing and distribution of fertilizers. On the basis of intelligence gathered by the DRI, the imports of urea by IFFCO and KRIBHCO were taken up for analysis and it was revealed that while the prevailing import price of urea is around US $ 410 per MT, both of them are importing urea from OMIFCO (in Oman) at about US $ 160 per MT.
Whereas the study of the imports from OMIFCO revealed that the said company was a Joint Venture between the Oman Oil Company (50%), IFFCO (25%) and KRIBHCO (25%). Further, the import of urea and ammonia from the said company was on the basis of a long term ‘Urea Off-take Agreement’ (UOTA for short) and an ‘Ammonia Off-take Agreement’ (AOTA for short) between the Government of India and OMIFCO.
The urea and ammonia was being purchased by the department of fertilizer from OMIFCO, and the imports were being made by IFFCO and KRIBHCO on the basis of an agreement for handling and marketing signed between the department of fertilizer and IFFCO and KRIBHCO.
The issue involved in this Appeal is whether there is relationship between OMIFCO (the exporter of the goods situated outside India) and KRIBHCO (importer in India/Appellant), and whether due to the alleged relationship the import price was influenced and consequently, whether Appellant is liable to pay the differential duty and consequential penalty, etc.
The Coordinate Bench in the Appellant’s own case along with the Appeals of IFFCO at Ahmedabad Bench, wherein, vide Final Order No. A/11354- 11358/2022 dated 11.11.2022 observed that “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.”
A Two-Member Bench of the Tribunal comprising Anil Choudhary, Judicial Member and AK Jyotishi, Technical Member observed that “In view of the aforementioned Final Order being accepted by the Department, we allow this Appeal and set aside the Impugned Order.”
To Read the full text of the Order CLICK HERE
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