2003 (7) TMI 157 - AT - Customs

Valuation (Customs) - Import of a ship by an importer - Assessment of transaction value for imported ship u/s Customs Valuation Rules - HELD THAT - The full description of the ship contained in Clause 19 which sets forth the date on which it was built, its type, tonnage, dimensions, details of propeller, anchor, engine, generators, etc. on board. The reasons 2, 3 and 4 in the amendment to its memorandum of agreement, that there was water leakage in the cargo compartment at the bottom and the plate is heavily damaged, No. 5 derricks is not in working condition and the vessel is in very poor condition therefore are not any of the exceptions specified in the original memorandum of agreement. As we have noted there were no provisions in that agreement for reduction in the price on that account. The first ground, that the generators are not according to the specifications and hence has no realisable value at all. is completely unsubstantiated. Of the four survey reports submitted by the surveyor of the ship, none points out that the generators are not in accordance with the specification. The statement that the generator has no realisable value at all obviously cannot be accepted. Even if it is true, that the generators were not according to the specifications in their memorandum of agreement, it could perhaps be concluded that their value was lower than what it could otherwise have been. How it can be claimed that generators have no value at all is beyond our comprehension. The importer's only contention is that the reduction in price mutually agreed upon between the buyer and seller is justifiable in the eye of law. We have however noted that this is done after the goods have been imported into India. It is the price of the goods that they are available at the time of import into India that we are concerned with. We find no basis for any reduction in that price. The order of the Commissioner (Appeals) is accordingly set aside the assessment determined by the Superintendent is restored.

Summary

Issues involved: Assessment of transaction value for imported ship u/s Customs Valuation Rules.

Summary:
The case involved the import of a ship by an importer, initially priced at US $6,17,421 in the memorandum of agreement, which was later reduced to US $5,56,678.90 due to discrepancies found upon arrival at the Alang port. The importer declared the lower value in the bill of entry for customs clearance, but the Assessing Officer enhanced the value based on the original agreement. The Commissioner (Appeals) upheld the revised value as per the addendum to the agreement, citing the Supreme Court decision in Eicher Tractors Ltd. v. CCE. The appeal challenges this decision.

The Tribunal noted that the transaction value for assessment, as per Customs Valuation Rules, is crucial. The key issue was whether the ship delivered was different from the one agreed upon in the memorandum of agreement. The agreement specified acceptance without inspection and delivery on an "as is where is" basis, with detailed descriptions of the ship's condition and components. The discrepancies highlighted post-arrival were not covered as exceptions in the original agreement, and no provision for price reduction existed. Claims regarding the generators' value were unsubstantiated, as survey reports did not support the lack of value assertion.

The importer argued for the post-import price reduction, but the Tribunal emphasized that the relevant value is at the time of import into India. As no valid basis for price reduction was found, the Commissioner (Appeals) decision was set aside, and the original assessment value was restored by the Tribunal.