2013 (11) TMI 1228 - AT - Customs

Valuation of goods - Mis declaration of goods - Reduction in value of goods - Held that - there was a genuine cause for reduction in the price of the imported vessel and the seller was also convinced that there is need for reduction in the price earlier agreed and accordingly accepted the lower price negotiated between the seller and the appellant. Section 14 of the Customs Act, 1962 also talks of the price which is either paid or payable to the seller. In this case, both the amounts paid and payable as per addendum dated 08.12.1997 was US 929388.60. It will be improper if importer is asked to pay customs duty as an amount more than what was the consideration for the transaction. There was a genuine reason for reduction of the price on certain facts which came to the knowledge of the appellant after importation. The actual transaction value paid as per the addendum dated 08.12.1997, is genuine and is required to be accepted for assessment purpose in the case of the appellant - Decided in favour of assessee.

Issues:
1. Examination of the genuineness of the addendum to the original MOA.
2. Validity of the price reduction claimed after importation.
3. Interpretation of Section 14 of the Customs Act, 1962 in relation to the case.

Issue 1: Examination of the genuineness of the addendum to the original MOA:

The appeal was initially rejected by the New Delhi Bench of CESTAT, upholding the Order-in-Appeal issued on 28.08.2000. However, the Supreme Court remanded the case back to the Tribunal for fresh consideration regarding the genuineness of the addendum entered into between the appellant and the supplier on 8th December 1997. The appellant argued that the description of the vessel in the original MOA indicated the presence of double skin side tanks, leading to additional weight loss. Evidence was presented to support this claim, including a certificate from a surveyor and a translation certificate of the Trim & Stability booklet. The appellant successfully negotiated a lower price based on this information, which was accepted by the seller as evidenced by a certificate from Dena Bank. The Tribunal, after reviewing the case records and the Supreme Court's directions, concluded that there was a genuine cause for the reduction in the vessel's price, and the seller had agreed to the renegotiated amount. Therefore, the genuineness of the addendum was established, justifying the price adjustment post-importation.

Issue 2: Validity of the price reduction claimed after importation:

The appellant contended that the reduction in price was warranted due to the discovery of the vessel's actual condition differing from the original MOA. The Tribunal found merit in the appellant's argument, noting discrepancies between the vessel's actual configuration and the description in the original MOA. The Tribunal emphasized that the negotiated lower price was based on valid reasons, and the seller had acknowledged and accepted the revised amount. Considering the circumstances and the evidence presented, the Tribunal concluded that the appellant had a legitimate cause for renegotiating the price post-importation. This justified the price reduction claimed by the appellant after the importation of the vessel.

Issue 3: Interpretation of Section 14 of the Customs Act, 1962:

The respondent argued that the price reduction claimed after importation was impermissible under Section 14 of the Customs Act, 1962, citing a previous judgment. However, the Tribunal distinguished the present case from the precedent by highlighting the unique facts and circumstances involved. The Tribunal noted that the actual transaction value, as per the addendum dated 08.12.1997, was genuine and reflected the revised price agreed upon by both parties. Section 14 of the Customs Act, 1962, which pertains to the price paid or payable to the seller, was interpreted in light of the specific details of this case. The Tribunal concluded that the appellant's case for a reduced price was valid, and the amount paid and payable as per the addendum should be accepted for assessment purposes. Consequently, the Tribunal allowed the appeal filed by the appellant, granting any consequential relief deemed necessary.

In summary, the Tribunal examined the genuineness of the addendum to the original MOA, validated the price reduction claimed after importation based on the vessel's actual condition, and interpreted Section 14 of the Customs Act, 1962 in favor of the appellant. The decision allowed the appeal and provided relief accordingly.

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