Business Standard

Indian Firm With Foreign Collaboration To Get Duty Relief: Sc

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BUSINESS STANDARD

The Supreme Court has dismissed an appeal of the central excise authorities and has held that mere holding of a certain percentage of stock by the foreign collaborator in an Indian company is not sufficient to make the two parties 'related persons' for calculating customs duty. It also held that for the two parties to be related, it requires the existence of interest by both in the business of each other.

In this case, the Mumbai customs authorities held that Fisher Rosemount (India) Ltd was related to Rosemount Inc of US which held 40 per cent equity share in the Indian company. They assumed that both the companies were interested in the business of each other and for determination of the value of imported goods, prices could not be the only consideration. The two companies shared technical data base and the Indian company had got the licence to manufacture electrical pressure transmitters in accordance with the technical data provided by the US partner. Therefore, the imports from the US collaborator by the Indian company were valued 20 per cent higher. However, CEGAT (Central Excise and Gold Appellate Tribunal) agreed with the company's petition. The excise authorities then appealed to the Supreme Court.

 

The bench consisting of Justice S Santosh Hegde and Justice Ashok Bhan stated that the excise authorities' premise that the Indian firm and the US company were related persons was wrong and therefore CEGAT was right in conceding to the contentions of the company.

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First Published: Nov 14 2001 | 12:00 AM IST

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