2022 (8) TMI 334 - AT - Customs

Valuation of imported vessel - substitution of reduced price by addendum - whether the transaction value of the vessel is to be price mentioned in the original MOA or the reduced price indicated in the addendum? - HELD THAT - The factum of actual payment of the price in terms of the addendum cannot be ignored while determining the value of the vessel under Section 14 of the Act. It is added that in such a situation the genuineness and the necessity of reduction in the price are required to be scrutinised very carefully - In the instant case, the Ld. Commissioner (Appeals) has not examined the genuineness of the addendum, and has proceeded to reject the appeal of the appellant. We may, however, add that the Commissioner (Appeals) did not examine the cogency of the reasons for price reduction. The Commissioner (Appeals) needs to examine the matter afresh. Accordingly, the impugned order is set aside, and the matter is remitted back to the Commissioner (Appeals) for fresh consideration, particularly in relation to the genuineness of the addendum entered into between the appellant and the supplier - Appeal allowed by way of remand.

Issues:
1. Determination of transaction value for customs assessment based on original MOA price or reduced price indicated in the addendum.
2. Examination of genuineness of the addendum and necessity of price reduction.
3. Applicability of statutory provisions in determining the value of the vessel under Section 14 of the Customs Act, 1962.

Issue 1: Determination of Transaction Value
The appeal involved a dispute over the transaction value of a vessel for customs assessment. The Appellant had signed an MOA with a company for the purchase of a vessel for demolition. The original MOA price was reduced by mutual agreement before delivery, but the Bill of Entry was assessed provisionally at the original price. The Appellant argued that the reduced price should be considered as the transaction value under Section 14 of the Customs Act, 1962. The Commissioner (Appeals) upheld the assessment based on the original MOA price. The Tribunal emphasized the importance of actual payment and the need to scrutinize the genuineness of price reduction. The Tribunal set aside the impugned order, remitting the matter back to the Commissioner (Appeals) for fresh consideration on the genuineness of the addendum.

Issue 2: Examination of Genuineness of Addendum
The Tribunal highlighted the necessity of examining the genuineness of the addendum entered into between the parties. It noted that the Commissioner (Appeals) had not scrutinized the genuineness of the addendum or the reasons for the price reduction. The Tribunal emphasized that in such cases, the authenticity and the reasons behind the price adjustment should be carefully evaluated to determine the correct transaction value for customs assessment. The Tribunal directed the Commissioner (Appeals) to reevaluate the matter, particularly focusing on the authenticity of the addendum, keeping all issues open for consideration.

Issue 3: Applicability of Statutory Provisions
In determining the transaction value of the vessel under Section 14 of the Customs Act, 1962, the Tribunal considered the statutory provisions and the significance of actual payment as per the addendum. It emphasized that while the original MOA price was a factor, the actual price paid should not be disregarded. The Tribunal stressed the need for a thorough examination of the genuineness and necessity of the price reduction in such cases. The Tribunal's decision to remit the matter back to the Commissioner (Appeals) was based on the requirement for a fresh consideration of the genuineness of the addendum and the reasons for the price adjustment, ensuring compliance with the statutory provisions.

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