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Issues: Valuation of imported ship for breaking purpose; Whether the correct assessable value is the initial MOA or the subsequent agreement.
In the judgment by the Appellate Tribunal CESTAT, Ahmedabad, the dispute revolved around the valuation of a ship imported for breaking purposes. Initially, a contract was made between a foreign supplier and a company at a higher assessable value as per a Memorandum of Agreement (MOA) dated 13-7-2001. Subsequently, the foreign supplier entered into another agreement on 13-8-2001 with the appellant, reducing the value of the ship. The key issue was whether the value in the first MOA or the subsequent agreement should be considered as the correct assessable value. The appellant argued that the facts of their case differed from a Larger Bench decision, where the price reduction occurred between the same parties, unlike in their case where the earlier MOA was with a different party. The Tribunal referred to the decision of the Hon'ble Supreme Court in the case of M/s. Udayani Ship Breakers Ltd. and highlighted that any sale of goods after the import process is considered a domestic sale, not an international one. Since the MOA was executed after the ship had already arrived in India, it was deemed a domestic sale. The Tribunal emphasized that the price of the ship in the international market, as reflected in the initial MOA dated 13-7-2001, should be adopted for duty assessment. Consequently, the Tribunal found no merit in the appeal and dismissed it. In conclusion, the judgment clarified the principles governing the valuation of imported goods for duty purposes, emphasizing the significance of the timing of sale agreements concerning imported items. The decision underscored the distinction between international and domestic sales post-importation, reaffirming the relevance of the initial agreement reflecting the international market price for duty assessment purposes.
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