Case Details: Elkem South Asia Pvt. Ltd. vs. Commissioner of Customs, Visakhapatnam-I (2026) 42 Centax 198 (Tri.-Hyd)
Judiciary and Counsel Details
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- S/Shri Angad Prasad, Member (J) & A.K. Jyotishi, Member (T)
- Shri R. Krishnan, Adv., for the Appellant.
- Shri V.R. Pavan Kumar, AR, for the Respondent.
Facts of the Case
The assessee, being a sole distributor and 100% subsidiary of its foreign parent company, imported goods through Visakhapatnam Port. The relationship was duly declared before the Special Valuation Branch (SVB), Mumbai. Initially, the SVB accepted previous imports based on transaction/invoice value, noting that the relationship had not influenced the pricing. However, concerning the subject imports, the assessing officer rejected the declared transaction value. Instead, the assessable value was enhanced by adopting the price of imports made by a third-party importer, pursuant to the contemporaneous import value as per the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. The assessing officer observed that the parent company provided discounts to sole distributors. Furthermore, the earlier SVB order had expired. Aggrieved by the rejection of the transaction value and the consequent enhancement of the assessable value, the assessee filed an appeal before the CESTAT.
CESTAT Held
The CESTAT held that the assessing officer was factually incorrect in observing that the earlier SVB order had expired. It was clarified that the order remained valid for three years and covered imports made prior to its expiry. Furthermore, it was held that the later SVB order itself recorded a finding that the relationship between the assessee and the parent company had not influenced the invoice value. Additionally, the discounts granted to distributors were considered normal, given the resale activities and associated overheads. The CESTAT observed that the third-party imports relied upon for comparison were not comparable. This was because the quantity and value imported by the third party were substantially lower, the third-party importer was an actual user and not a reseller or distributor, and the comparison was based on only one bill of entry, which was applied across multiple consignments of the assessee. Accordingly, the rejection of the transaction value and the adoption of the contemporaneous import value could not be sustained. Therefore, the appeal was allowed in favour of the assessee.
