2023 (6) TMI 321 - AT - Customs

Re-negotiation of price of Ship Breaking - number of items either replaced or not found as per the understanding arrived with the seller - prices in general had come down during the period of delay - prices had come down by 10 to 15% in international market - HELD THAT - The re-negotiation of price was done. Matter remanded back to the Commissioner (Appeals) to look into various aspects. Specially, the evidence of international market prices having come down during the relevant period. The date of entry will be relevant but also whether the re negotiated transaction value was correct and final in terms of re-negotiated contract, it is also to be seen whether same was in consonance with the terms of original agreement, which allowed them to examine the ship in Indian waters. The matter remanded back.

Summary

Issues involved: Re-negotiation of price in Ship Breaking transaction, relevance of date of entry for valuation, examination of re-negotiated agreement's genuineness.

Summary:

Re-negotiation of Price:
- The Appellate Tribunal considered the re-negotiation of price in a Ship Breaking transaction where the appellant claimed that due to various factors like replacement of items and decrease in market prices, the price was re-negotiated resulting in a 12% reduction. The appellant argued that the original agreement allowed inspection only after entry into Indian waters, leading to the re-negotiation on 30.11.2011.

Valuation based on Date of Entry:
- The Learned Commissioner (Appeals) emphasized the relevance of the date of entry for valuation purposes, citing a decision from a Larger Bench. However, the appellant relied on a different decision in M/s. Chaudhary Ship Breakers Vs. Co. Cus., Ahmd.- 2010 (259) ELT 161 (S.C), highlighting a different perspective on valuation criteria.

Examination of Re-negotiated Agreement:
- The Tribunal observed that the re-negotiated agreement mentioned changes in the vessel like conversion and engine modifications, along with a general decrease in market prices. However, the Tribunal noted that certain details such as the specific period of market price decrease and evidence supporting the claims were lacking. The matter was remanded back to the Commissioner (Appeals) for a more thorough examination, especially regarding the genuineness of the re-negotiated agreement and its alignment with the original agreement terms.

Conclusion:
- The Tribunal set aside the initial order and directed a re-examination of the case by the Commissioner (Appeals) to delve deeper into various aspects, including the evidence of market price fluctuations, correctness of the re-negotiated transaction value, and adherence to the original agreement terms regarding inspection in Indian waters.