1991 (4) TMI 234 - AT - Customs

Summary

Issues Involved:

1. Acceptance of the invoice price for imported goods.
2. Validity of the Price List used by Customs authorities.
3. Application of trade discounts in determining the value for customs duty.
4. Evidence required to corroborate the claimed discount.
5. Compliance with Section 14 of the Customs Act, 1962.
6. Comparison with contemporaneous imports and decisions in similar cases.

Issue-wise Detailed Analysis:

1. Acceptance of the Invoice Price for Imported Goods:

The appellants imported flour milling machinery from the German Democratic Republic and declared a reduced invoice price based on negotiations. The Assistant Collector rejected this invoice price, citing a higher price in a 1979 Price List. The appellants argued that the reduced price was due to a 20% trade discount negotiated with the suppliers. The Tribunal found that the authorities had not undertaken any investigation to verify the discrepancy between the invoice price and the Price List. The Tribunal concluded that the invoice price should not have been rejected without proper investigation and evidence.

2. Validity of the Price List Used by Customs Authorities:

The Assistant Collector and the Collector of Customs (Appeals) relied on a 1979 Price List to reject the invoice price. However, the Tribunal noted that this Price List was not part of the case records. The appellants provided a Price List from their suppliers showing a special trade discount of up to 25%. The Tribunal observed that the authorities failed to provide evidence of contemporaneous imports at the higher price shown in the Price List, which would have justified rejecting the invoice price.

3. Application of Trade Discounts in Determining the Value for Customs Duty:

The appellants claimed a 20% trade discount on the imported machinery, which was not accepted by the Assistant Collector. The Tribunal noted that the suppliers had confirmed the discount in a letter, and this discount was also offered to other customers. The Tribunal found that the authorities did not properly consider this evidence and rejected the invoice price without adequate justification.

4. Evidence Required to Corroborate the Claimed Discount:

The Collector (Appeals) rejected the invoice price due to a lack of corroboration from the foreign supplier. The appellants later provided letters from the suppliers confirming the discount. The Tribunal held that the authorities should have sought such corroboration before rejecting the invoice price. The Tribunal emphasized the need for proper investigation and evidence to support the rejection of the declared price.

5. Compliance with Section 14 of the Customs Act, 1962:

The Tribunal discussed the concept of "deemed value" under Section 14 of the Customs Act, which is the price at which goods are ordinarily sold in the international market. The authorities rejected the invoice price based on a higher price in the Price List. However, the Tribunal found that there was no evidence of contemporaneous imports at the higher price, and the authorities did not follow the proper procedure to determine the deemed value.

6. Comparison with Contemporaneous Imports and Decisions in Similar Cases:

The Tribunal considered previous decisions, including Himachal Flour Mills, Bagadi Roller Flow Mills, and Aarkeyess Imports Corporation, which involved similar issues of invoice price rejection. In those cases, the authorities had evidence of contemporaneous imports at higher prices or other incriminating documents. In contrast, the present case lacked such evidence, and the authorities did not undertake any investigation. The Tribunal concluded that the facts of the present case did not justify the rejection of the invoice price.

Conclusion:

The Tribunal allowed the appeals, set aside the orders of the lower authorities, and directed that the invoice price declared by the appellants be accepted for customs duty assessment. The Tribunal emphasized the need for proper investigation and evidence before rejecting the declared price and highlighted the importance of complying with the provisions of Section 14 of the Customs Act, 1962.