ORDER
Gowri Shankar, Member (T)
1. The question for the consideration is the valuation of goods imported by the appellant from M/s Rosemount Inc. USA. In the order impugned in the appeal, the Collector (Appeals) has confirmed the finding of the Asst. Collector that the appellant Rosemount Inc. and the foreign collaborator were related and that by application of Rule 6 of the Customs Valuation Rule 1963, lump sum royalty payable by the appellant to the collaborators on the sales of the product made by the appellant were to be included in the assessable value of the goods imported by it. These goods consisted of components required by the appellant to manufacture electronic pressure transmitters.
2. Then Advocate for the appellant raised the contention that the appellant and Rosemount Inc. are not related persons. For them to be related there has to be mutuality of interest and each of them must be shown to have interest in the business of the other. He does not dispute that the foreign collaborator had his interest in the appellant by virtue of the fact that it has a 40% stock holding in the appellant company. He however contends that there is no material to show that the appellant was interested in the business of the foreign collaborators. He relies upon the Tribunal in Varma Trafag Instruments Pvt. Ltd. v. CCE .
3. The departmental representative adopts the reasoning in the impugned order.
4. In Varma Trafag Instruments v. CCE , the Tribunal relied upon the decision of the Tribunal in CCE v. Maruti Udyog Ltd. to say that a 28% stock holding by the foreign collaborator in Varma Trading, the appellant before him was not sufficient to constitute relationship. In CCE v. Maruti Udyog Ltd the Tribunal was of the view that for two persons to be related each of them must be interested in the business of the other. Since Maruti did not have interest in the business of Suzuki Motor Co., which held 26% stock holding in Maruti, the two were not related. By applying this ratio, would have to be held that the two were not related.
5. It would follow from these, therefore that the expenses incurred by the appellant towards payment for technical fees and royalty on the sales of its product would not form part of the assessable value of the imported goods.
6. The fact of the two not being related would also result in our setting aside the other conclusion of the Asst. Collector, confirmed by the Collector (Appeals). This was that price of the goods imported by the appellant did not include the elements of freight and insurance but was only the F.O.B. value. The Asst. Collector came to this conclusion by comparison of the price for the appellant with the price for identical goods sold by Rosemount Inc. to companies at Singapore and Australia. He found that the price as which the appellant imported the goods was about 2.4% higher than those price charged to the Singapore and Australia buyers. He therefore ordered that the price addition made to the price on account of that actually incurred wherever available or 20% of the FOB value where it was not.
7. There is a lack of clarity in the Collector’s finding with regard to the relationship between Rosemount Inc. and the buyers in Singapore and Australia. He says in the same paragraph that they are associated companies of Rosemount Inc. and therefore not independent buyers. At the same time, he takes the price at which these companies buy the goods as a criterion, if the purchase was not by an independent buyer unrelated to the supplier, it would not be a true price in the course of international trade. It would therefore be improper to adopt such a price as a standard of comparison to determine the value under Section 14 of the goods imported by the appellant and this order would be liable to be set aside. Apart from that once it is held that the appellant and the supplier are unrelated, it would first have to be shown that the price at which the appellant imported the goods were not accountable i.e. it would not be the price in the course of international trade for independent buyers. This has not, been done. Here again the decision of the Tribunal in CCE v. Maruti Udyog Ltd. would apply to the case that price that was applied was the price at which the Indian Companies imported the goods. The existence of different prices for buyers in different countries for the same goods is a well-known commercial practice.
8. The departmental representative raises a point that is of some interest and not lacking significance i.e. the decision in Varma Trafag Instruments mainly follow the decision of Maruti Udyog Ltd. The Member (Judicial) had expressed the view the Section 14(1) a is inapplicable and that it is only a best judgment of the Rule 8 of the Valuation that would apply. Therefore he concludes that the decision does not lay down the proposition Section 14(1) a should apply.
9. This point is not without significance. In paragraph 9 of the reported decision, the Member (Judicial) Mr. Gowri Shankar Murthy had clearly said while agreeing with the view that the appeal is to be dismissed that Section 14(1) a value would not be applicable. However, following this judgment which has been confirmed by the Supreme Court, other benches in the Tribunal (including the one that formed the order in Maruti Udyog) have upheld value under Section 14(1) a goods imported in the similar circumstances. The Bombay High Court has taken the same view in UOI v. Mahindra & Mahindra . The judgment has also been confirmed by the Supreme Court. We therefore do not find this ground sufficient not to apply this ratio arising from CCE v. Maruti Udyog Ltd.
10. Appeal allowed. Impugned order set aside. Consequential relief if permitted by law.