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Issues: Valuation of imported goods under Section 14 of the Customs Act, 1962 based on the declared price versus prevailing market price.
In this case, the appellants imported High Density Polyethylene Grade Mitsui 'HIZEX 5000 S' from Japan, but the Customs authorities rejected the declared price of US $1,180 per M.T. and increased it to US $1,310 per M.T. The dispute arose due to discrepancies in the timing of shipment, opening of Letter of Credit (L/C), and amendments to the L/C. The Assistant Commissioner based the valuation on prevailing prices at the time of importation, citing non-compliance with the terms of the indent. However, the appellants argued that the price was agreed upon in the contract dated 9-12-1987 and supported by letters from the Indian indentor and the Japanese manufacturer. They also highlighted the scarcity of the product in the international market, leading to delays in delivery. The appellants contended that modifications to the L/C did not nullify the contract, citing a Calcutta High Court decision in a similar case. The High Court's interpretation of Section 14 emphasized considering the contracted price for delivery at the time and place of importation, rather than prevailing prices at the time of shipment or arrival. The judgment also noted that payment terms are contractual matters and cannot invalidate a contract. The Assistant Commissioner also compared the import prices with other consignments of the same material from the same Japanese manufacturer but shipped through different channels. The appellants imported directly from the manufacturer, while the compared imports involved intermediaries like a Dubai-based supplier. The judgment highlighted the differences in pricing due to elements like supplier's commission and location of shipment. The comparison with a similar import from Antwerp at a higher price raised questions about the standard price charged by the Dubai supplier. Ultimately, the Tribunal held that the declared price by the appellants should be accepted as the assessable value under Section 14 of the Customs Act, 1962, as it was the price agreed upon in the contract and not influenced by any special relationship between the parties or prevailing market conditions. The appeal was allowed in favor of the appellants.
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