1998 (1) TMI 76 - SC - Customs

Ascertainment of value of goods - Held that - the value of the goods is to be ascertained on the basis of the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation and exportation in the course of international trade. The relevant date would therefore be the date of importation or exportation. Shri Mehta has laid stress on the words ordinarily sold or offered for sale and has submitted that in view of these words the date of contract is the relevant date. We are unable to agree. The words ordinarily sold or offered for sale have to be read along with the words which precede and the words that follow these words. If thus read these words mean that for the purpose of assessing the value it is necessary to ascertain the price at which the said or like goods are sold or offered for sale for delivery at the time and place is importation and exportation in the cases of international trade. The words ordinarily sold or offered for sale do not refer to the contract between the supplier and the importer but to the prevailing price in the market on the date of importation or exportation. We are therefore unable to accept the contention urged by Shri Mehta that the Tribunal has committed any error in proceeding on the basis that value has to be assessed according to the price as on the date of importation and not on the basis of the date of contract. The price of the goods imported by M/s. Hibotex Pvt. Ltd. could therefore provide the basis for assessing the value of the goods imported by the appellant. The price of the goods imported by M/s. Hibotex Pvt. Ltd. was 7, 00, 000 Japanese Yen per set. Having regard to the fact that the appellants had contracted for a larger quantity the Additional Collector has allowed quantity discount of 1, 00, 000 Japanese Yen per set on the basis of the letter of suppliers dated September 7 1988 and he assessed the value of the goods at 6, 00, 000 Japanese Yen per set. The said assessment has been upheld by the Tribunal. We do not find any infirmity in the said approach of the Additional Collector. In the circumstances we do not find any merit in the appeal and the same is accordingly dismissed.

Summary

Issues:
Assessment of customs duty based on the date of importation vs. date of contract.

Analysis:
The appeal involved a dispute regarding the assessment of customs duty on the importation of second-hand water jet looms. The appellant imported the looms from Japan under a contract made on December 1, 1987, while another firm imported similar goods at a higher price under a contract made on May 2, 1988. The Customs authorities issued a show cause notice to the appellant to enhance the declared value of the goods based on the prices of similar goods imported by the other firm. The Additional Collector assessed the value at 6,00,000 Japanese Yen per set, considering the prices of the goods imported by the other firm. The appellant contended that the value should be assessed based on the date of the contract, not the date of importation.

The relevant legal provision under Section 14 of the Customs Act was examined. The section states that the value of imported goods for customs duty purposes is determined based on the price at which such goods are ordinarily sold or offered for sale at the time and place of importation in international trade. The Supreme Court rejected the appellant's argument that the value should be assessed based on the date of the contract. The Court emphasized that the value must be determined at the time of importation, not the date of the contract. The prevailing market price at the time of importation is crucial for assessing the value, not the contract date.

The Court also dismissed the appellant's reliance on a Calcutta High Court decision, stating that the contract between the supplier and importer does not impact the assessment of customs duty value. The Court upheld the Additional Collector's assessment based on the prices of similar goods imported by the other firm around the same time. The quantity discount allowed by the Additional Collector was justified, considering the larger quantity contracted by the appellant. Ultimately, the Court found no merit in the appeal and upheld the Tribunal's decision to dismiss the appeal. The Court ruled in favor of assessing the customs duty value based on the prevailing market price at the time of importation, not the date of the contract.