1993 (9) TMI 221 - AT - Customs

Summary

Issues Involved:
1. Determination of the assessable value of imported goods under Section 14(1) of the Customs Act, 1962.
2. Applicability of Rule 4, Rule 5, and Rule 6 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.
3. Relevance of a specially reduced price in the context of international trade.
4. Definition and consideration of "similar goods" under Rule 2(e)(i) of the Customs Valuation Rules, 1988.

Detailed Analysis:

1. Determination of the assessable value of imported goods under Section 14(1) of the Customs Act, 1962:
The primary issue was whether the declared price of U.S. $ 1.50 per kg for the imported B-30 and S-30 varieties of "Raw Optical Glass sheets" could be deemed as the value of the goods under Section 14(1) of the Customs Act, 1962. The appellants argued that the declared price represented the value of the goods as per Section 14(1) since it was the result of a negotiated price in the normal course of international trade without any additional payment or mutual business interest between the buyer and the seller. The Tribunal found that the invoice price was a negotiated price, and there was no evidence of any additional payment or mutual business interest. Therefore, the declared price was acceptable as the transaction value under Section 14(1).

2. Applicability of Rule 4, Rule 5, and Rule 6 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988:
The Assistant Collector had rejected the declared price under Rule 4 and determined the value under Rule 6(b) based on the import price of similar goods at U.S. $ 1.80 per kg. The appellants contended that Rule 4(2) should apply since the transaction value had to be accepted unless specific conditions warranted its rejection. The Tribunal agreed with the appellants, stating that the transaction value under Rule 4 should be accepted in the absence of any evidence suggesting that the price was not the sole consideration or that the buyer and seller had mutual business interests. The Tribunal ruled that the Assistant Collector's application of Rule 6 was not justified as the declared price represented the transaction value under Rule 4.

3. Relevance of a specially reduced price in the context of international trade:
The respondents argued that the price of U.S. $ 1.50 per kg was a specially reduced price not available to other buyers. However, the Tribunal found no evidence to suggest that the special price was available only to the appellants. The supplier's letters indicated that the reduced price was part of a promotional strategy to increase sales in the Indian market and was available to all buyers. Therefore, the Tribunal concluded that the specially reduced price did not disqualify the declared price from being accepted as the transaction value.

4. Definition and consideration of "similar goods" under Rule 2(e)(i) of the Customs Valuation Rules, 1988:
The Assistant Collector had determined the value under Rule 6 by considering the imported goods as similar to another variety (S-10) priced at U.S. $ 1.80 per kg. The appellants argued that the imported goods were not identical or similar to the S-10 variety due to differences in shade and transparency. The Tribunal agreed, noting that the imported goods could not be deemed commercially interchangeable with the S-10 variety. The Tribunal emphasized that shade and transparency were critical factors affecting the quality and demand of optical raw glass. Therefore, the Assistant Collector's finding that the imported goods were similar to the S-10 variety was not sustainable.

Conclusion:
The Tribunal held that the declared price of U.S. $ 1.50 per kg represented the assessable value under Section 14(1) of the Customs Act, 1962. The appeal was allowed, and the impugned order was set aside. The Tribunal found that the specially reduced price was part of a promotional strategy available to all buyers and that the imported goods were not similar to the S-10 variety. The determination of value under Rule 6 was not justified, and the transaction value under Rule 4 should be accepted.