2002 (2) TMI 544 - AT - Customs

Summary

Issues:
1. Enhancement of price of imported Superior Kerosene Oil
2. Confirmation of demand for differential duty
3. Imposition of penalty in lieu of confiscation
4. Discrepancy in pricing method based on Platt's published quotations
5. Allegations of misdeclaration of goods' value
6. Contention regarding the basis of price determination
7. Comparison with contemporaneous import by another party

Analysis:
1. The judgment concerns the Commissioner of Customs, Kolkata enhancing the price of Superior Kerosene Oil imported by the appellants from US $239.9 per M.T. to US $279.232 per M.T., confirming the duty demand of Rs. 25,87,919.00, and imposing a penalty of Rs. 10.00 lakh due to alleged misdeclaration, despite the goods being cleared as per a High Court order.

2. The appellants' contract with a foreign supplier specified pricing based on Platt's published quotations for 25 days, leading to a dispute with customs authorities who proposed a 5-day average instead. The appellants opened a Letter of Credit and cleared the goods, but faced a show cause notice for misdeclaration, leading to the impugned order by the Commissioner.

3. The appellants argued that international oil pricing allows various methods, including the one they followed, and cited certificates supporting their pricing approach. They contended that the Commissioner erred in not considering contemporaneous imports by another party under similar terms.

4. Citing a Supreme Court decision, the appellants emphasized that the price determination should align with the contract terms unless special circumstances exist. They highlighted discrepancies in the Revenue's approach and the acceptance of similar pricing by Vizag Customs for a different importer under the same contract terms.

5. The Tribunal found the appellants' pricing method in line with international trade practices and contract terms, rejecting the Revenue's argument for a 5-day average. The judgment emphasized the absence of evidence to dispute the appellants' pricing and the lack of special circumstances to question the declared value.

6. Ultimately, the Tribunal set aside the Commissioner's order, ruling in favor of the appellants due to the consistency of pricing with the contract terms, the acceptance of similar pricing by Vizag Customs, and the lack of evidence to challenge the declared value. The appeal was allowed, providing consequential reliefs to the appellants.