ORDER
T.K. Jayaraman, Member (T)
1. This appeal has been filed against the Order-in-Appeal No. 390/2003 dated 15.7.2003, passed by the Commissioner of Customs (Appeals), Chennai.
2. The brief facts of the case are as follows :
The appellants M/s Guhring India Pvt. Ltd., Bangalore (hereinafter referred to as ‘GIPL’) is 100% wholly owned subsidiary of Guhring OHG, Germany (herein after referred to as ‘GOHG’). M/s GIPL has a foreign collaboration agreement with ‘GOHG’ as per which the appellants shall market the products of GOHG as well as produce some products such as high quality cutting tools and tooling systems. GOHG manufactured over 40000 varieties of tools, drills, Taps, etc. which were supplied to various customers all over the World. The goods are supplied to GIPL on the basis of discounted price. There is a price lists for the finished tools under general discount ranging from 25% to 75% of item wise. Over and above the discount, GIPL is given an exclusive additional discount of 25% on the already discounted price. Since GIPL and GOHG are related, the imports of the appellants were a subject matter for investigation. The Deputy Commissioner of Customs, SVB, Chennai rejected the transaction value and disallowed the special discount of 25% offered to the appellants. Aggrieved over the decision of the Deputy Commissioner of Customs, SVB, Chennai, the appellants approached the Commissioner (Appeals). The Commissioner (Appeals) upheld the Original Order. Hence the appellants have come before the Tribunal for the relief.
3. Shri Rajesh Chander Kumar, learned Advocate appeared for he appellants and Shri K. S. Reddy, SDR appeared for the Revenue.
4. The learned Advocate urged the following points :
(i) No show cause notice was issued to the appellants alleging under valuation of goods. Hence the order violates principles of ‘Natural Justice’. The following case laws were relied on :
(a) Collector of Central Excise v. ITC Ltd.
(b) Collector of Central Excise v. Sudhakar Litho Printers
(ii) The transaction value cannot be rejected merely on the ground that the parties are related and in the absence of any evidence to show that there was a mutuality of interest between the two parties. There is no findings on the mutuality of interest in the Order-in-Original and the Order-in-Appeal. The following case laws were relied on :
(a) Sivashankar Granites Pvt. Ltd. (High Court)
(b) Volvo India Pvt. Ltd v. CC, Chennai
Since parent company has uniform policy to allow additional discount of 25% to subsidiaries across the World being ‘Large Scale buyers’ and similar additional discount offered to the other buyers buying similarly large volumes, the transaction value cannot be rejected.
(iii) Even though the appellants supplied the details of the supplies by parent company to others outside India, the Original authority has not considered the same.
(iv) The subsidiary company imports in large quantities and has to meet post importation expenses towards warranty, servicing, etc. Hence the additional discount of 25% was offered. The following case law was relied on :
(a) CCE, Chennai v. Hewlett Packard Ltd. 1999 (108) ELT 408 (Tri.-Chennai)
The reliance placed on provisions of Rule 4(2) proviso (a), (b) and (c) post 7.9.2001, is also misplaced, as the valuation is being considered in respect of imports being made since 1997/98 onwards.
(v) The valuation by the deductive method if adopted would itself show that there is no under valuation and the price is reasonable considering the discounts offered to a subsidiary in the course of international trade.
5. The learned SDR re-iterated the Order-in-Appeal and the Order-in-Original.
6. We have gone through the records of the case carefully. The main grievance of the appellants is that the issue was decided without issue of show cause notice, thereby violating the principles of ‘Natural Justice’. The appellants contended that they produced copious data to establish that the relationship with the foreign supplier is not influenced the price. They have contended that the special 25% discount was given in view of the large volume of imports effected by them. They have also stated that in respect of certain unrelated buyers, the price charged was either comparable or even less than the price charged by the appellants. It appears that the data furnished by the appellants have not at all been examined by the lower authority. In these circumstances, it is a fit case to remand the entire issue to the Original authority for de novo decision after giving the appellants an opportunity of personal hearing. The appellants may furnish all the evidence which they relied on to show that their relationship with foreign supplier is not true. The Adjudicating authority shall examine the data furnished by the appellants and pass an order in accordance with law. This appeal is remanded to the Original authority.
(Pronounced in the open court on 24 OCT 2005)