Per Moheb Ali M. : The appellant, Eclipse Combustion India Private Limited is a group company of Eclipse group incorporated in USA. The latter has other group companies in U.K. and Netherlands.

2. The appellant imported basic burners and other components and parts from Eclipse USA and Eclipse U.K. he sells package systems to OEMs and end use of the imported goods, the appellant gets a discount of 40% to 53% when goods were supplied by the Parent Company in USA and 40% to 45% when they are supplied by other group company in U.K. The original authority disallowed this discount mainly on the ground that the appellant is a related to the supplier (being a 100% subsidiary) and such relationship has affected the price at which the goods are transacted. He however allowed a discount of 20% which is available to other non related buyers such as resellers to whom the suppliers also sell the goods in India. It may be mentioned that the suppliers in USA and UK sell the same goods to other unrelated buyers in India giving them a discount of 10% to 20%. The original authority therefore held that the discount available to unrelated buyers such as "Resellers" can alone constitute the admissible discount and not the higher discounts (45% to 53% and 40% to 45%) the appellant gets.

3. In appeal, the Commissioner (Appeals) confirmed the order of the lower authority in a rather brief order on the following grounds (a) The relationship between the buyer and seller is not disputed; (b) The higher discount offered to the appellant is relatable to the relationship between the buyer and seller and hence not admissible; (c) that under Rule 4 (3) (b) of CVR 1988 on a sale between related persons the transaction value shall be accepted only when the importer demonstrates that the declared value of the goods being valued closely approximates to the transaction value of identical goods or of similar goods, in sales to unrelated buyers in India.

4. Heard both sides.

5. The appellants argue that the Commissioner erred in rejecting the transaction value without considering the fact that the appellant gets a higher discount because of several activities carried out by them. The higher discount is relatable to transfer of certain risks and costs, commissioning, marketing etc. carried out by them unlike the Resalers who do not involve themselves in such activities; that he is a different class of buyer compared to the Resalers to whom the same goods are supplied; that the commercial levels of transactions are different and that the higher discount enjoyed by him is not governed by the fact that he is a related person. The parent company has a worldwide sales policy according to which different levels of discount are permissible depending on the person to whom the goods are supplied. Thus a subsidiary gets a better discount compared to resalers. It is argued that the Commissioner ought to have appreciated the fact that the appellant does not get any preferential price compared to others such as 'Resalers'. The latter get a lesser discount because they do not carry any risk unlike the appellants.

6. The Ld. DR argued that the appellant does not dispute the fact that he is a subsidiary of the supplier company and so is related. Transaction value can be rejected when the transaction is between related parties if the Department has evidence to establish that the same goods are sold at a different price to other buyers. It is further submitted that irrespective of the Pricing Policy of the parent company, imported goods, have to be valued in terms of Section 14 read with Valuation Rules; when presented for assessment. He supported the contention of the Commissioner in this regard.

7. We have considered the rival contentions. The facts as they emerge clearly bring out that the appellant is related to the supplier within the meaning of Rule 2 (2) of Custom Valuation Rules. But that fact alone can not provoke the customs authorities to reject the transaction value. Rule 4