2005 (6) TMI 185 - AT - Customs

Challenged the enhancement of the transaction value - Crude Sunflower Oil - Contemporaneous import. As per T.K. Jayaraman Member (T) - HELD THAT - In my view, none of the instances enumerated in Rule 4(2) is applicable to the present case. The value of 428 US D per MT has been arrived at purely on commercial considerations based on contracts. The supplier, in order to honour the contract, supplied the goods at the contracted price. There is also no allegation that the appellant paid to the supplier more than the contracted value. Under these circumstances, there are actually no grounds to reject the transaction value. The reliance on Rajkumar Knitting Mills case does not appear to be correct as the same was rendered in the context of the old law. In the landmark judgment in the case of Eicher Tractors Ltd. v. CC, Mumbai 2000 (11) TMI 139 - SUPREME COURT , the Hon'ble Supreme Court has held that in the absence of special circumstances, price of imported goods is to be determined u/s 14(1)(A) in accordance with the Customs Valuation (Determination of Price of Imported Goods), Rules, 1988. The 'special circumstances' have been statutorily particularised in Rule 4(2) and in the absence of these exceptions, it is mandatory for Customs to accept the price actually paid or payable for the goods in the particular transaction. In the present case, in my view, there are no 'special circumstances' warranting rejection of the transaction value. Hence, I propose to allow the appeal. As per by the Member (Judicial) Dr. S.L. Peeran - The valuation of the subject goods is governed by the Customs Valuation Rules, 1988. These very rules had fallen for examination by the Apex Court in the case of Eicher Tractors 2000 (11) TMI 139 - SUPREME COURT . The Apex Court rejected the Revenue's contention that Rule 4(1) allowed the ordinary international value of the goods to be ascertained on the basis of data other than the price actually paid for the goods. Their lordships, further, held that, in terms of Section 14(1) and Rule 4, the price paid by an importer to the vendor in the ordinary course of trade shall be taken to be the value in the absence of any of the special circumstances indicated in Section 14(1) and particularized under Rule 4(2). No justification for rejecting the transaction value of the goods. Yet another pertinent point, which is discernible from the facts of the case, is that the unit price of US 485 gathered by the department from contemporaneous import was in respect of a total quantity of 500 MTs of crude sunflower oil (Edible grade), whereas the subject matter of the present valuation dispute is a total quantity of 1000 MTs of identical goods. Obviously, the department did not take into account this quantity difference while adopting the unit price of US 485 as standard for the purpose of assessment of the subject goods. In the instant case, it was not the invoice alone but also the contract between the appellants and their supplier that provided the transaction value of the subject goods and the Customs authorities had no reason whatsoever to reject this value. Thus the Revenue cannot claim effective support from Punjab Processors 2003 (9) TMI 86 - SC ORDER . Thus, I hold that the transaction value of the subject goods requires to be accepted, in this case, for the purpose of assessment to Customs duty. Accordingly, the appeal is allowed. MAJORITY ORDER - In terms of the majority order, the appeal is allowed.

Summary

Issues Involved:
1. Enhancement of transaction value of imported goods.
2. Rejection of transaction value based on contemporaneous imports.
3. Applicability of Rule 4(2) of the Customs Valuation Rules, 1988.
4. Relevance of contract price versus importation date price for customs valuation.

Issue-wise Detailed Analysis:

1. Enhancement of Transaction Value of Imported Goods:
The appellants contested the enhancement of the transaction value declared in the Bill of Entry for 500 MTs of Crude Sunflower Oil, arguing that the value was fixed per the contract and international prices, which were fluctuating. They supported their claim with a brochure showing consistent prices and cited the case of Eicher Tractors Ltd. v. CC, Mumbai, asserting that the transaction value cannot be rejected without factors outlined in Rule 4(2) of the Valuation Rules. They also referenced the Calcutta High Court's decision in Sneha Traders Private Ltd. v. CC, which held that the contract price should be accepted, and the Tribunal's ruling in Vision Trade Links v. CC, Nagpur, where the enhancement was set aside due to lack of evidence showing influence by non-commercial considerations.

2. Rejection of Transaction Value Based on Contemporaneous Imports:
The department argued that the transaction value could be rejected and contemporaneous evidence relied upon to show that the invoice value was incorrect, citing the Supreme Court judgment in Punjab Processors Pvt. Ltd. v. CC. The Commissioner upheld the re-determination of the assessable value, noting that there was a contemporaneous import of the same item in the same shipment at a different value, supporting the department's stance.

3. Applicability of Rule 4(2) of the Customs Valuation Rules, 1988:
The Commissioner concluded that the import fell within the exceptions contained in Rule 4(2) of the Customs Valuation Rules, specifically under proviso (b), which allows rejection of transaction value if the sale involves an abnormal discount or reduction from the ordinary competitive price. The appellants argued that none of the instances in Rule 4(2) applied to their case, as the value was based on commercial considerations and there was no allegation of additional payments beyond the contracted price.

4. Relevance of Contract Price Versus Importation Date Price for Customs Valuation:
The Tribunal's majority decision, influenced by the Supreme Court's ruling in Eicher Tractors Ltd., held that the transaction value should be accepted in the absence of special circumstances outlined in Rule 4(2). The dissenting opinion by Member (Judicial) relied on the Rajkumar Knitting Mills case, which emphasized the date of importation as the relevant date for valuation, but this was distinguished by the majority as it pertained to the old law. The majority found no special circumstances to reject the transaction value and noted that the department did not account for the quantity difference between the appellants' import and the contemporaneous import.

Conclusion:
The majority decision allowed the appeal, holding that the transaction value of the subject goods should be accepted for customs duty assessment, as there were no special circumstances warranting its rejection under Rule 4(2) of the Customs Valuation Rules, 1988. The appeal was thus allowed, and the transaction value declared by the appellants was upheld.