1991 (12) TMI 174 - AT - Customs

Summary

Issues:
1. Whether buying commission should be excluded from the assessable value under Section 14 of the Customs Act.
2. Interpretation of Customs Valuation Rules, 1988 regarding the inclusion of buying commission in the transaction value.
3. Determination of the status of a buying agent in international trade.
4. Validity of invoices issued by the buying agent in relation to ownership implications.
5. Application of Rule 9(1)(i) of Customs Valuation Rules to exclude buying commission from the assessable value.

Analysis:
The case involved 177 appeals by Tata Iron & Steel Company Ltd. challenging the inclusion of buying commission in the assessable value under Section 14 of the Customs Act. The company argued that buying commission should be excluded as per Rule 9(1)(a)(i) of Customs Valuation Rules, 1988. The Assistant Collector rejected the refund claims stating that Section 27 does not empower interference in valuation under Section 14. The Collector of Customs (Appeals) upheld the decision, emphasizing that buying commission was included in the price paid, hence not to be excluded.

During the Tribunal hearing, the appellants contended that buying agents should not be considered principals and referred to various documents supporting the appointment of buying agents. The revenue authority argued that buying agents are suppliers, citing a precedent. However, the Tribunal examined the Customs Valuation Rules, particularly Rule 4(1) and Rule 9(1)(i), which exempt buying commission from inclusion in the transaction value. The Tribunal scrutinized the definition of invoice from a law dictionary to determine ownership implications.

The Tribunal concluded that buying commission paid to the agents could not be included in the assessable value as per Rule 9(1)(i) exception. It clarified that invoices issued by the buying agent did not confer ownership and that the letters of credit were in favor of the foreign suppliers. Relying on legal interpretations and precedents, the Tribunal allowed all 177 appeals, directing the revenue authorities to act accordingly. The judgment emphasized the importance of following Customs Valuation Rules and exceptions regarding the inclusion of buying commission in the assessable value.