Order Date - 12 September 2023

Parties : M/s. Heidelberg India Pvt. Ltd. Vs.  Commissioner of Customs, Chennai II Commissionerate

Facts -

• The Appellant, M/s. Heidelberg India Pvt. Ltd. is a 100% wholly owned subsidiary of the foreign  Company M/s. Heidelberger Drukmaschinen AG, Germany. The appellant imported goods (spare parts) from M/s. Heidelberger Drukmaschinen AG, Germany.
• The Valuation of goods are accepted by the department but it was alleged that the employee cost, rent, repairs and maintenance and office & miscellaneous expenses which are deducted by the appellant from the transaction value is not available to them as these are post importation expenses which are internal expenses of the importer and hence cannot be deducted while arriving at the transaction value using the deductive method. 

Issue -

• Whether the post-importation expenses incurred by the appellant are deductible while determining the transaction value of the imported goods?

Order -

• The Tribunal pointed out that Rule 7 of the Customs Valuation Rules, 2007 , permits deductions of additions usually made for profits and general expenses in connection with sales in India of imported goods of the same class or kind.
• Since the disputed expenses viz employee cost, rent, repairs and maintenance and office & miscellaneous expenses are part of ‘general expenses’ relating to the direct and indirect cost of marketing the goods in question the appeal must succeed.
• It was found that from 2001 to 2013 the Department accepted the transaction value of the imports as declared by the appellant. It was only in 2013 that for the first time the Department took a view that the declared value needed to be enhanced. Since the Department were dealing with legal issues which involved costing of the goods among other issues, it may have helped to have done a cost audit so that the matter could have been examined with reference to the Cost Accounting Standards applicable to the case. 
• Hence it was held that impugned order has failed to legally substantiate and sustain the rejection on deduction of expenses incurred towards employee cost, rent, repair maintenance and office expenses and miscellaneous expenses from the unit sale price, by holding them as post importation expenses. The impugned order is hence set aside. The appeal is disposed off.