of Central Excise, Mumbai Vs. M/S. Fisher Rosemount (India) Ltd.  Insc 595 (6 November 2001)
Hegde & Ashok Bhan Santosh Hegde, J.
dispute pertaining to determination of the valuation of goods imported by the
respondent herein from M/s. Rosemount Inc. USA, the Assistant Collector of
Customs, Special Valuation Bench, Bombay, held that the respondent herein is a related person to M/s. Rosemount
Inc. of USA, hence, it assumed that both the
said companies are interested in the business of each other and that the prices
are not the sole consideration. Therefore, it held that the valuation of the
goods imported by the respondent herein from M/s. Rosemount Inc.
USA will have to be done under Section
14(1)(b) of the Customs Act, 1962 read with the Customs Valuation Rules, 1963.
The said authority refused to accept the CIF value of the goods imported by the
respondent, consequently, it made an addition of 2.4 per cent over and above
the CIF value shown by the respondent of the goods imported by it. As stated
above, this was done on the basis that the two companies, named hereinabove,
had the status of related persons.
appeal filed against the said determination by the respondent herein before the
Collector of Customs (Appeals), Bombay, came to be dismissed, upholding the findings of the original
aggrieved respondent preferred an appeal before the Customs, Excise & Gold
(Control) Appellate Tribunal, Regional Bench at Mumbai (for short the tribunal)
which having reversed the said order of the original and appellate authority,
the Commissioner of Central Excise, Mumbai, is before us in this appeal. The
tribunal in this case, relying upon its own judgment in the case of Collector
of Customs, Bombay v. Maruti Udyog Ltd., Gurgaon [1987 (28) ELT 390] came to
the conclusion that mere holding of a certain percentage of stock by the
foreign collaborator in the Indian company like the respondent herein, was not
sufficient to constitute the relationship so as to make the two persons as
related persons. It further held that for two parties to be related, it also
required the existence of interest by both in the business of each other. On
the said basis, it came to the conclusion that mere fact that M/s.Rosemount
Inc. USA, had the 40 per cent equity share in the respondent company and had
provided technical data base for the manufacture of electronic pressure
transmitters ipso facto did not make the two companies related persons. In the
absence of any other material, the tribunal held that there was no reason to
reject the price declared by the respondent for the purpose of valuation. On
the said basis, the tribunal reversed the findings of the authorities below and
allowed the appeal of the respondent.
contended on behalf of the appellant before us that M/s. Rosemount Inc. USA and M/s. Fisher Rosemount (India) Ltd., (the respondent herein) are
related persons and have interest in the business of each other. Therefore, the
valuating authority was justified in loading the declared value with extra 20%,
more so because there was difference in the value of the goods exported by the
American Company to Singapore and Australia on one hand and to the respondent on the other. It was also
contended that the judgment of the tribunal in the case of Maruti Udyog Ltd.
(supra) was wrongly relied upon by the tribunal, hence, the order under appeal
is liable to be set aside.
applicability of Section 14(1)(b) of the Act, to the facts of the case by the
original and the appellate authority was solely based on the factum of related
persons without there being any other acceptable evidence. This finding of
related person was again based on the fact of the equity participation of the
US Company in the Indian Company and the technical data base supplied by the US
Company to the Indian Company.
case of Maruti Udyog Ltd. (supra), the tribunal had held :
no doubt, correct that Suzuki held 26% shares in Maruti and, for that reason,
had a proportional representation on the Board of Directors of Maruti also. But
Maruti had no share holding in Suzuki nor any representation on the Board of
Directors of Suzuki. To rule out valuation under Section 14(1)(a), the seller
and the buyer should have interest in the business of each other. One-sided
interest is therefore, not enough; there has to be a mutuality of interest and Maruti
is right in pleading that such mutuality of interest did not exist [1984 (17)
ELT 323 (SC) Union of India & Ors. v. Atic Industries Ltd.].
with this situation, the learned representative of the department argued that Maruti
had an indirect interest in the business of Suzuki since Maruti was interested
in technical knowhow from Suzuki not only for the current models and their
components but also for future models and their components. We do not agree
with the departments plea. The transfer of technical knowhow from Suzuki to Maruti
is a separate commercial transaction governed by the Licence Agreement and
Suzuki charges a price for it. That does not create an interest of Maruti in
the business of Suzuki, Japan.
on the above finding, the tribunal in that case had held that in the absence of
any other material, it is not correct to load the import price. It also held in
that case that no evidence had been led before it to show that even the payment
of royalty induced any extra commercial reduction in the import price.
judgment of the tribunal has since been accepted by this Court in the case of
Collector of Customs, Bombay v. Maruti Udyog Ltd., Gurgaon [1989 (22) ECR 482
(SC)]. Though by a brief judgment, this Court held that after examining the
provisions of the Act and the facts found by the tribunal, the tribunal was
right in its conclusion. On the said basis, the appeal of the Collector of
Customs came to be dismissed, affirming the judgment of the tribunal.
Therefore, the tribunal in the present case rightly relied on the said judgment
in Maruti Udyog (supra), the facts of which case are almost similar to the
facts of this case.
noticed hereinabove, the original authority as well as the appellate authority
proceeded on the basis that merely because the US Company owned 40 per cent of
equity shares in the Indian Company and that provided the technical data base
to the Indian Company as also the Indian Company got the licence to manufacture
the electrical pressure transmitters in accordance with the said technical
data, the same was sufficient to hold that the two companies were related
persons. On this basis they drew an inference that the CIF value was not the
sole consideration for sale of the goods imported by the respondent.
we find that the very basis relied upon by the original and the appellate
authority suffers from the lack of acceptable material, then ipso facto the
inference drawn from such conclusion also is liable to be set aside. If that be
so, then there is hardly any other material to come to the conclusion that the
CIF value declared by the respondent did not truly represent the correct value
of the goods imported.
Gupta, learned counsel appearing for the appellant, pointed out that it is
quite evident from the material on record that the CIF value of the goods
imported by the respondent did not include the freight as could be seen from
the documents available on record like the CIF value of the goods supplied by
the said American Company to the other buyers at Australia and Singapore,
hence, the authorities were justified in loading the cost declared by the
respondent with 20% addition.
contra, it is pointed out to us by Shri Joseph Vellapally, learned senior
counsel for the respondent, that assuming it is so even then the value of the
goods imported by the respondent was much higher than the value of the goods
supplied by the American Company to the purchasers at Australia and Singapore. Therefore, no adverse inference could have been drawn on
this count. Be that as it may, it is sufficient for us to hold that once the
case of the Revenue that the American and the Indian Company (respondent) are
related persons, fails, we think the tribunal was justified in setting aside
the orders of the original as well as the appellate authority and we find no
reason to interfere with the same.
the reasons stated above, this appeal fails and the same is hereby dismissed.