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Issues: Valuation of imported coal based on calorific value discrepancy between parties and Customs laboratory.
In the case before the Appellate Tribunal CESTAT, New Delhi, the appellant, a cement manufacturer, imported coal for use in manufacturing. The dispute centered around the valuation of three coal consignments imported from South Africa in 1999. The parties had agreed on a value of US $30 per metric ton for coal of 6500 Kcal. However, discrepancies arose when the calorific value was tested at the port of export and upon arrival in India, showing values of 6550 Kcal and 6549 Kcal respectively. The Customs laboratory conducted its own test, determining the value to be 6693 Kcal, leading to an assessable value of US $30.67 per metric ton and a duty demand. Upon reviewing the records and submissions, the Tribunal found that the transaction between the buyer and seller was based on the heat value agreed upon by both parties. There was no legal requirement to disregard this agreed transaction value and calculate a theoretical value based on the Customs laboratory test result. The Tribunal emphasized that the value obtained from the Customs laboratory was academic and did not apply to the actual transaction. The price agreed upon by the parties at US $30.23 per metric ton, based on the test result of the examiner (SGS), was deemed the actual amount paid or payable. Consequently, the Tribunal held that the differential duty demand in the impugned order was unsustainable. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellant, with any consequential relief granted as necessary.
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