Order Date – 11 September 2023

Parties: M/s. PPN Power Generating Co. Pvt. Ltd. and M/s. Marubeni Corporation vs The Commissioner of Customs (referred to as Department)

Facts:

• The Appellant, M/s. PPN Power Generating Co. Pvt. Ltd. was engaged in a power plant project located in Tamil Nadu. The project got registered with the department and submitted both a bond and a bank guarantee.
• Certain goods were imported from M/s.Marubeni during the period from 10.2.2000 to 20.12.2001 and the appellant opted for provisional assessment vide letter dated 26.12.2002. This approach involved assessing customs duties based on the invoices provided for the imported goods.
• It was noted by the department that there was undervaluation of the goods supplied to appellant sourced by M/s.Stone & Webstar through M/s.Marubeni. On such final assessment, the original authority confirmed differential duty demand on M/s.PPN and also imposed penalty under Section 112 (a) of the Customs Act, 1962.

Issue – 

• Whether the differential duty demand and penalties imposed on M/s. PPN and M/s.Marubeni are legally sustainable?

Order – 

• The Tribunal observed that the value which is stipulated in the contract has been paid to M/s. Marubeni. There is no allegation that there is some hidden payments made by M/s. PPN to M/s. Marubeni. The documents of payment show that appellant has paid only the amount as per contract.
• The Tribunal relied on the decision in the case of Agarwal Industries Vs CC Vizag - 2006 (193) ELT 421 (Tri.-Bang.) it was held that the transaction value arrived at purely on commercial considerations based on contracts, transaction value not to be rejected unless established with reason.
• From the submission of the appellant it shows that there has been inordinate delay in finalizing the assessment. Further there was no steps on the part of the department to finalize the assessment even though the appellant has been continuously requesting for finalizing the assessment by issuing letters to the department on various days. 
• The finalization has happened after 15 years of provisional assessment which, is extremely inordinate delay, and also against the instructions issued by CBIC as to finalization of Project Import Assessments. The department has not been able to put forward cogent evidence to reject the transaction value.
• Hence it was held that the demand of differential duty the order for confiscation of goods, imposition of Redemption Fine and penalties imposed on M/s.PPN cannot sustain and requires to be set aside. For the same reasons, set aside the penalty imposed on M/s.Marubeni also.