2011 (1) TMI 604 - AT - Customs

Transaction value - modifying the earlier memorandum of agreement - purchase of vessel MV WESTMED - the price actually paid to the foreign supplier is the transaction value as per Rule 4(1) of Valuation Rules and the same has to be accepted under Rule 4(2) of the said Rules - the issue is no more res-integra it stands held in the respondents own case reported as Commissioner of Customs, Bhavnagar Vs. Mahavir Ship Breakers reported in 2009 (234) ELT 176 (Tri. Ahmd.) that the reduction in the transaction value after the import of the vessel by modifying the earlier memorandum of agreement is not acceptable for the purpose of reducing the price - Decided against the assessee.

Summary

Issues involved: Valuation of imported vessel for ship breaking activity

Analysis:
The appeal was filed by the Revenue against a part of the order passed by the Commissioner (Appeals) in favor of the respondents regarding the valuation of an imported vessel for ship breaking activity. The respondents entered into a memorandum of agreement for the purchase of the vessel without inspection, but upon inspection, discrepancies were noted, leading to a price reduction. The Customs assessed the vessel at the original contract value, which was contested by the respondents. The Commissioner (Appeals) ruled in favor of the assessee, stating that the price actually paid to the foreign supplier should be considered as the transaction value. However, the Tribunal noted that a previous decision in the respondents' own case established that reducing the price after import is not acceptable. Citing a Larger Bench decision, the Tribunal held that the assessment at the original value should be maintained. Consequently, the impugned order of the Commissioner (Appeals) was set aside, and the original adjudicating authority's order was restored, allowing the Revenue's appeal.

This judgment revolves around the valuation of an imported vessel for ship breaking activity. The case highlighted the importance of the transaction value as per the Valuation Rules and the challenges associated with reducing the price post-import. The Tribunal's decision was based on legal precedents and established principles regarding valuation rules and import assessments. The ruling emphasized the need to adhere to the original value for assessment purposes, following a consistent approach in line with previous decisions and larger bench rulings. The judgment provides clarity on valuation methodologies and the significance of transaction values in import assessments, ensuring uniformity and compliance with legal standards in such cases.