1997 (8) TMI 151 - AT - Customs

Summary

Issues:
1. Assessment of the value of imported goods for customs purposes based on the declared price.
2. Determining the assessable value of goods under the Customs Act, 1962 and Valuation Rules.
3. Consideration of the timing of negotiations and price agreements in relation to the importation of goods.
4. Application of the transaction value for imported goods as per the Valuation Rules.
5. Interpretation of the Customs Co-operative Council's Advisory opinion on G.A.T.T. Valuation Agreement.

Analysis:
The case involved the appellants filing a Bill of Entry in the Mumbai Custom House for the clearance of High-Density Polyethylene, declaring its value at US $ 800 per Metric Ton (PMT) C.I.F. However, the Customs House discovered that the goods had been shipped at a higher prevailing price. The appellants explained that the consignment was originally meant for another buyer, but due to banking issues, they agreed to purchase the goods at US $ 800 PMT, claiming it was the prevailing international market price. The Assistant Commissioner of Customs determined the assessable value at US $ 1045 PMT, based on the price at which the supplier had shipped the goods to the original buyer, citing Customs Act, 1962 and Rule 11 of Valuation Rules. The Assistant Commissioner considered the lower price as a compensated price due to demurrage incurred after landing, not the real price, thus rejecting it as the assessable value under Rule 4(2) of Valuation Rules.

The Tribunal noted that negotiations for the reduced price occurred after the goods had already been imported into India. Rule 4 of Valuation Rules stipulates that the transaction value of imported goods should be the price actually paid for the goods when sold for export to India. As the goods were sold at US $ 1045 PMT for export to India, this price was considered the actual price for importation. The Tribunal emphasized that the transaction between the supplier and the original buyer constituted a "Sale," aligning with the Customs Co-operative Council's Advisory opinion on G.A.T.T. Valuation Agreement. The Tribunal distinguished this case from precedent where prices were negotiated before importation, emphasizing that the timing of negotiations was crucial in determining the transaction value. The Tribunal rejected the appellants' argument based on the price of an earlier import by another buyer, as it was negotiated after the importation was completed. Considering the evidence presented by the Department regarding prices around the same time, the Tribunal upheld the Assistant Commissioner's order, concluding that there was no reason to interfere with it, and thus rejected the appeal.