Page 271 - ELT_15th July 2020_Vol 373_Part 2

2020 ] INDO RUBBER AND PLASTIC WORKS v. COMMISSIONER OF CUSTOMS, NEW DELHI 253

import is on arms length price. The parties are not related to each other. The ap-
pellant had also incurred marketing and sales promotion cost for its own brand
‘Vicky’, bifurcation of the cost for promotion of ‘Vicky’ and ‘Li Ning’ brand was
given. Further contended that the transactions are properly recorded in the
books of account, the agreement with M/s. Sunlight Sports, Singapore was dis-
closed to the Department and thus there is no element of any concealment or
contumacious conduct on the part of the appellant. Hence, extended period of
limitation is not available to the Revenue.
9. The show cause notice was adjudicated on contest confirming the
differential demand of duty holding that the marketing cost/expenses incurred
by the appellant were a condition of sale of the imported goods. Had the appel-
lant not agreed to bear such cost as provided in Article 7 of the Agreement, M/s.
Sunlight Sports would not have appointed them as a sole distributor and no im-
ports would have taken place. Further, observing that some of the agreements
between ‘M/s. Sunlight Sports’ and ‘Sports Association’ in India for its sponsor
is signed by the Manager of the appellant. Hence, it was concluded that appel-
lant have made payments or incurred expenses on behalf of M/s. Sunlight
Sports. The contention of the appellant that advertisement and promotion was a
post-import activity and hence cost was not includible in the value of the import-
ed goods and thus Rule 10(1)(e) of the CV Rules is not attracted, was rejected.
Further, the bifurcation of the advertisement and sale promotion cost as regards
‘Li Ning’ and ‘Vicky’ brand filed, was rejected as the same being was not signed
by the appellant or authenticated by their Chartered Accountant. Further, held
that the non-disclosure of distribution agreement tantamounts to suppression of
facts and wilful misstatement with intent to evade payment of customs duty.
Accordingly, the differential duty of Rs. 1,60,45,493/- was confirmed and further
the goods imported during the disputed period were held liable for confiscation,
but in absence of availability of goods, redemption fine was not imposed. Fur-
ther, equal penalty was imposed under Section 114A of the Customs Act, 1962.
10. Being aggrieved, the appellant-assessee is before this Tribunal.
11. Learned Counsel appearing for the appellant urges that the im-
pugned order is vitiated as the same is passed on incorrect understanding of the
facts. Further, the impugned order is passed in a mechanical way without proper
application of mind. He further urges that in para 16 of the impugned order, the
Learned Commissioner has observed that the appellant is the Authorised sole
and exclusive agent and distributor of ‘Li Ning’ products in India. It is submitted
that appellant is not the sole and exclusive agent appointed for distribution of ‘Li
Ning’ brand in India. There are other agents who have been appointed for distri-
bution of the said products in India, who have also been importing identical
goods.
12. Further, in para 24.4 of the impugned order, it is observed that the
appellant had not disclosed the agreement and the same tantamounts to mis-
statement. It is submitted that the appellant is not related to M/s. Sunlight
Sports, Singapore. Further, on being requisitioned during investigation, the ap-
pellant did provide the copy of agreement. It is further urged that appellant have
neither incurred nor is paying any amount towards sales promo-
tion/advertisement on behalf of M/s. Sunlight Sports. On conjoint reading of
Articles 4 and 7 (supra), it is evident that appellant importer is not bound to in-
cur any fixed amount or percentage of the import value of the goods or the in-
voice value of the goods, towards advertisement and sales promotion. The
EXCISE LAW TIMES  15th July 2020  271