Case law

Custom, Excise & Service Tax Tribunal · 19 Oct 2022

Cisco Commerce India Private Limited vs Commissioner Of Customs

Legal principle

Once the SVB has accepted a related-party transaction value under Rule 3(3)(a), the department cannot load value on the basis of the importer's own earlier higher-priced imports treated as 'contemporaneous', and any alleged change in circumstances of sale must be referred back to the SVB Cell rather than re-adjudicated in appeal.

Court decision

The Tribunal allowed both appeals, answering all the questions (i) to (v) in favour of the appellant, holding that the revenue erred in rejecting the invoice price, that the loading was unjustified, and that the Commissioner (Appeals) acted beyond jurisdiction in seeking to reconsider the SVB findings and directing the SVB Cell to review them.

Facts

M/s Cisco Commerce India Pvt. Ltd., a subsidiary of Cisco Systems International BV, imported Cisco products from its holding company on related-party basis at transfer prices set 20% below its negotiated Indian resale prices (18% towards sales/marketing/administrative costs and 2% as its margin), and regularly filed self-assessed Bills of Entry. An SVB order dated 14.11.2018 of the Bangalore Commissionerate had accepted the declared transaction value under Rule 3(3)(a) of the Customs Valuation Rules, 2007. During faceless assessment at JNCH, RMS instructions flagged 'higher contemporaneous imports' of identical goods (ranging up to 200% higher), and the department loaded the value and re-assessed the Bills of Entry via Orders of Assessment dated 9.10.2020 and 27.11.2020. The Commissioner (Appeals) dismissed the importer's appeals, which were then challenged before the CESTAT, Mumbai.

Key provisions