2008 (11) TMI 17 - SC - Customs

Vessel imported for ship breaking - determination of the value - according to the respondent an Addendum came to be inserted in the Memorandum of Agreement (MoA) by virtue of the said addendum the price stood reduced from US 9, 70, 960.23 to US 8, 70, 960.23 revenue s allegation that addendum is not genuine is accepted it appear that said addendum have been executed at the request of the buyer vessel should be valued at US 9, 70, 960.23 revenue s appeal allowed

Summary

Issues:
Determination of the value of a ship imported by M/s. Atam Manohar Ship Breakers Ltd.

Analysis:
The Civil Appeal before the Supreme Court revolved around the determination of the value of a ship imported by M/s. Atam Manohar Ship Breakers Ltd. The Memorandum of Agreement (MoA) dated 13th April, 1999, between the respondent and the seller indicated a value of USD 9,70,906.23 for the vessel imported for ship breaking. However, an Addendum No.II was claimed to have been inserted in the MoA on 29th April, 1999, reducing the price to US$ 8,70,960.23. The Customs Officer inspected the vessel on 20th April, 1999, and physical delivery was given to the respondent on 21st April, 1999. A provisional assessment was made on 28th May, 1999, and finalized by the Assessing Officer on 11th January, 2001, based on the original value of US$ 9,70,960.23.

The Commissioner and the Tribunal held that since the price reduction occurred before the filing of the Bill of Entry, the reduced price of US$ 8,70,960.23 should be considered as the value of the vessel. However, the Supreme Court focused on the genuineness of the addendum to the MoA. The Court noted discrepancies in the addendum, such as the absence of the date of execution, insertion date, reasons for price reduction, and lack of mention of damages as a factor for reduction. The Court highlighted that the addendum seemed self-serving and did not align with the "as is where is" basis of the vessel purchase. As a result, the Court set aside the previous judgments, allowing the Civil Appeal of the Department.

In conclusion, the Supreme Court's decision centered on the authenticity and validity of the addendum reducing the price of the imported ship. The Court emphasized the importance of clarity, consistency, and adherence to contractual terms in determining the value of the vessel. By scrutinizing the addendum and its discrepancies, the Court overturned the previous rulings and ruled in favor of the Department, highlighting the need for transparency and accuracy in commercial agreements and valuation processes.