2026-VIL-732-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Transaction value of goods imported from parent company, Mutuality of interest between the importer and exporter – Import of computer equipment and accessories from parent company. Department rejected the transaction value and sought to load a notional profit margin - Whether the transaction value can be rejected and the value enhanced by adding a notional profit margin on the ground that the appellant and its parent company were 'related persons' under the Customs Valuation Rules – HELD - The contention of the appellant that the parent company and the appellant have no interest in the business of each other is rejected. It is undisputed that the appellant is a fully owned subsidiary of its parent company. Therefore, it is difficult to say that the parent company had no interest on the appellant business. It is also difficult to say that the appellant had no interest in the business of its parent company because it as to show profits to its parent company – If one company directly or indirectly controls the other the two should be treated as related persons. It is undisputed that the parent company controls the appellant. Therefore, they two are related persons - There are, in all two types of goods viz. Palladium system imported in 2006 and ‘Other goods’ imported after 2007 - For the Palladium system imported in 2006, the relationship did not influence the price as the cost certificates submitted by parent company showed that the price included the costs plus a reasonable profit margin. Therefore, the addition of a notional profit margin to the transaction value of this item was not justified - For the other goods imported after 2007, the commercial invoices were issued only for Customs purposes without including any profit margin. In such a case, where the related party transaction did not reflect the true arm's length price, it reasonable for the Customs authorities to add a profit margin based on the profitability information provided by the parent company - The addition of profit margin for the Palladium system is set aside, while upholding the addition of profit margin for the other goods - The appeal is partly allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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