Customs - Hewlett Packard directed to pre-deposit Rs. 120 Crores
COMPUTER Giant Hewlett Packard India was in for a shock recently when the CESTAT ordered pre-deposit of Rs. 120 Crores in addition to the Rs.95 Crores already paid by them.
HP (India) is a 100% subsidiary of HP (USA) and is engaged in the business of import and resale of IT products like computers, printers etc. in India. During the period of dispute (29/04/2005 to 19/03/2009), they imported various IT products from overseas HP entities and resold the same to independent buyers in India. The goods in question were imported from HP (Singapore). HP (Singapore) also directly exported identical goods to 3rd party buyers in India (Indent Sales). For these Indent Sales, HP (India) provided marketing services to HP (Singapore) and also provided post-sale services like warranty in respect of the products sold by HP (Singapore) to independent 3rd party buyers in India. For such services, HP (India) received a commission from HP (Singapore). Beyond the warranty period, HP (India) also offered Annual Maintenance Service to the end users in India in respect of the HP products. The demand of duty of Rs.925.40 crores was confirmed against HP (India) by the Commissioner in adjudication of 19 show-cause notices issued on 29/04/2010 and same pertains to the IT products imported by the assessee from HP (Singapore). The assessee's contention that the declared value of the goods was determined strictly in accordance with the Global Pricing Policy (ROVAC) of the HP Group of Companies was rejected by the Commissioner and he made additions to the declared value on account of (i) international freight & insurance (ii) MRP products (iii) Customs duty/Cum-duty treatment (iv) warranty costs (v) trade discounts (vi) over funding and (vii) SRFR (Supply Chain Replenishment Fulfilment and Reinvention) products imported on free-of-cost basis. The total amount of duty worked out on the basis of these additions is Rs.925.40 crores.
The Tribunal prima facie found no merit against demand of duty of Rs.363.4 crores and ordered pre deposit of Rs. 120 Crores in addition to the deposit of Rs.90 Crores already made. Please see