Case Details: Commissioner of Customs Versus Schunk Metal and Carbon (India) Pvt. Ltd. (2025) 30 Centax 20 (S.C.)
Judiciary and Counsel Details
- J.B. Pardiwala & R. Mahadevan, JJ.
- S/Shri N. Venkataraman, A.S.G., Ms Chinmyee Chandra, Suyash Pandey, Navanjay Mahapatra, Advs. & Gurmeet Singh Makker, AOR, for the Petitioner.
Facts of the Case
The assessee, an importer, brought goods from a related supplier. The value of the imported goods was determined based on the supplier’s price list, and the assessee accepted this transaction value for customs duty purposes. The Revenue contended that the relationship between the importer and supplier may have influenced the pricing of the goods, and therefore sought the inclusion of a 5% royalty in the transaction value. In response, the assessee presented a transfer pricing study conducted for income tax purposes, which clearly demonstrated that the relationship between the importer and supplier had not influenced the price of the goods. Based on this transfer pricing analysis, the assessee maintained that the transaction value, derived from the supplier’s price list, was correct and should be accepted.
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) carefully examined the facts and decided in favour of the assessee, concluding that the inclusion of the 5% royalty was not justified. Dissatisfied with this decision, the Revenue filed an appeal before the Supreme Court, challenging the CESTAT’s judgment.
CESTAT Held
The Hon’ble Supreme Court held that the CESTAT’s decision should stand. The Court affirmed that the transaction value, based on the supplier’s price list, was appropriate, as the relationship between the importer and supplier did not affect the price. The Court found the transfer pricing study valid and emphasised that no royalty should be added under the Customs Valuation Rules when the relationship has no direct impact on pricing.
List of Cases Reviewed
- Schunk Metal and Carbon (India) Pvt. Ltd. v. Commissioner — 2024 (387) E.L.T. 197 (Tri.-Bang) = (2023) 12 Centax 298 (Tri.-Bang) — Affirmed [Paras 1, 3]
