2003 (6) TMI 146 - AT - Customs

Assessment (Customs) - Valuation (Customs) - transaction value - Future import - import Terne Steel Sheet for manufacture of these fuel tanks - HELD THAT - In the instant case the appellant had tied up a long term supply contract. Prices were fixed depending upon the quantity and time of supply. The prices varied from US 585 PMT to 555 US PMT depending upon the time of supply. Such a price clearly satisfies the requirement of being normal price at the time of importation. The transaction value has not been questioned by the Customs Authorities on account of any deficiencies mentioned under the Customs Valuation Rules. That another person imported identical goods at higher price is no ground for discarding the transaction value. Such a course is also fraught with practical difficulties. As transaction values vary from customer to customer and from seller to seller different transaction values would be observed by the assessing authorities at any given time for the same goods. If they reject various transaction values in a search for the correct transaction value there would be no satisfactory answer at all and assessment would be rendered well nigh impossible. In the present case the appellant got certain reduced prices apparently because of quantity and time of supply. Also because he is an old regular buyer of the supplier. The Deputy Commissioner has ordered that in place of those discounted prices prices fixed by him would be the basis for assessment. In doing so Deputy Commissioner has allowed reduction of 15 US PMT after every purchase of 1000 MT. This is nothing more than his ipse dixit. The discount to be allowed while valuing the goods for customs assessment is the discount given by the vendors for their commercial consideration and not the various discounts to be fixed by assessing authorities. In the facts of the present case it is obvious that appellant had got a lower price than M/s. Rasandik Engineering Industries Ltd. on account of their long term imports and the quantity contracted for. As the Apex Court observed in Basant Industries case 1995 (1) TMI 89 - SUPREME COURT the Customs Authorities should have realised that relationship between supplier and importer has also be to kept in mind because it is a matter of common knowledge that a price which is offered by a supplier to an old customer may be different from a price which the same supplier offers to a totally new customer . The impugned order of assessment has come to be passed because the lower authorities overlooked this common knowledge . Thus the appeals are allowed after setting aside the impugned orders. The goods shall be assessed at the transaction values and any amount paid in excess of the duty payable on the basis of the transaction values shall be returned to the appellant forthwith.

Summary

Issues Involved:
1. Reopening of past assessments under 20 Bills of Entry without issuing a show cause notice.
2. Advance determination of the assessable value for future imports.
3. Valuation of consignments covered by 9 Bills of Entry based on transaction values.

Detailed Analysis:

1. Reopening of Past Assessments:
The appellant, M/s. Mark Auto Industries Ltd., contended that the Deputy Commissioner could not have reopened the assessments already made under 20 Bills of Entry without issuing a show cause notice as mandated by Section 28 of the Customs Act. The Commissioner (Appeals) upheld the Deputy Commissioner's order, stating that reopening was correct as the dispute about valuation arose within six months prior to 28-4-2000. However, the Tribunal found merit in the appellant's argument, emphasizing that Section 28 requires a show cause notice to be issued within the prescribed period for any duty not levied or short-levied. Since no such notice was issued, the order reopening the assessments was deemed invalid.

2. Advance Determination of Assessable Value for Future Imports:
The appellant argued that the Deputy Commissioner had no authority under the Customs Act to fix the assessable value in advance for goods yet to be imported. The Tribunal agreed, stating that the power to determine assessable value in advance lies with the Central Government through tariff value fixation. Therefore, the Deputy Commissioner's order regarding future imports was held to be beyond his jurisdiction and invalid.

3. Valuation of Consignments Covered by 9 Bills of Entry:
The appellant contended that the declared values for the goods covered by 9 Bills of Entry should be accepted as the transaction values under Rule 4 of the Customs Valuation Rules, 1988. The Deputy Commissioner had rejected these values, citing higher prices paid by another importer, M/s. Rasandik Engineering Industries India Ltd., for identical goods from the same supplier. The Tribunal found this reasoning flawed, noting that transaction values can vary due to various factors, including long-term relationships and bulk purchasing. The Tribunal cited the Apex Court's rulings in Eicher Tractors Ltd. and Basant Industries, emphasizing that transaction values should be accepted unless vitiated by conditions specified in the Customs Valuation Rules. The Tribunal concluded that the lower prices negotiated by the appellant were valid and should be accepted for customs assessment.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned orders. It directed that the goods be assessed at the transaction values and any excess duty paid be refunded to the appellant. The Tribunal's decision underscored the importance of adhering to statutory requirements for reopening assessments and recognizing the validity of negotiated transaction values in commercial transactions.