9911796707
TMI Blog1999 (10) TMI 471X X X X Extracts X X X X X X X X Extracts X X X X ..... established an irrevokable Letter of Credit through the concerned bank on the said U.K. supplier on 21-8-1993 for supply of 2000 M.Ts of the said item at 298 US $ per M.T. FOB Los Angles (USA). Before the shipment was made the foreign suppliers approached the appellants and offered price reduction provided the total quantity of 5000 MTs. was imported as a package deal. Since the offer was lucrative, the appellant Shri J.S. Mehta, who was a Director in M/s. Borax India Ltd. and the other company M/s. Rama Agro Chemical Industries (two of the appellants before us) and a relative of partners of third appellants namely M/s. Akshay Industries, negotiated with the foreign supplier in this regard. The other two appellants namely Rama Agro Chemical Industries and Akshay Industries having shown interest in importing the remaining 3000 MTs. of the same goods at these prices, this decision was conveyed by Sri J.S. Mehta to the foreign supplier. Accordingly, the Letter of Credit opened by M/s. Borax India Ltd. was amended on 27-9-1993, though the goods had been shipped on 16-9-1993 in view of the confirmation received by the foreign supplier from Shri J.S. Mehta in the case of all the three i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned Advocates submit that neither of these two grounds are valid in law to rebut effectively the declared transaction value for the reason that no contemporaneous imports of goods either identical or similar from USA have been shown by the Department at US $ 332.48 CIF Madras. The learned advocates further submit that though the department has also objected to the amendment of Letter of Credit on 27-9-1993, though the goods were shipped on 16-9-1993, that by itself does not vitiate the contract between the buyer and the foreign seller, as the contract is independent of the Letter of Credit. The learned advocate submits that the Letter of Credit is merely an arrangement to banking channels for remittance of payments against the goods received. In this connection, he cites AIR 1970 SC 891 - Tarapore Co., Madras v. Shao Tractory, Moscow, AIR 1981 SC 1426 - UCO Bank v. Bank of India and AIR 1986 Delhi 126 - Food Corporation of India v. Aroson Enterprises Ltd. Another. It has been held both by the Delhi High Court and Hon ble Apex Court therein that the Letter of Credit being a banking arrangement is independent of any civil contract. With respect to alleged undervaluati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction value of the foreign supplier from Hongkong could not be set aside in the absence of any other contemporaneous imports. He submits that the said decision is clearly applicable to the facts of this case also. 5. The learned Advocate also submits that some of these consignments were cleared on advance licence produced by the importers under DEEC scheme claiming exemption benefit under Notification No. 203/92-Cus. and since the validity of the said advance licence and the applicability of the said Notification was not challenged by the department at the time of clearance or subsequently in the present show cause notices, therefore, the duty has wrongly been confirmed on these quantities by the orders impugned. He submits that in the present show-cause notices, the department has not mentioned the said Notification No. 203/92-Cus. In this connection, he cites the decision of the Tribunal in the case of Instamedic International v. CC as reported in 1997 (89) E.L.T. 701 and also the decision of Hon ble Apex Court in the case of Gajanan Visheshwar Birjur v. UOI as reported in 1994 (72) E.L.T. 788 (S.C.). 6. Thirdly, the learned Advocates also submit that when the entire goods we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He also relies on the judgment of Hon ble Apex Court in the case of Bhadrachalam Paper Boards Ltd. as reported in 1999 (106) E.L.T. 290 (S.C.). 8. The learned D.R. is at great pains to defend the Orders-in-Original on the following grounds :- (a) He submits that there are only two manufacturers in the world of this item namely M/s. Borax Inc., USA and another in Turkey. The USA manufacturers normally supply the goods at US $ 340 per MTs, whereas the Turkish supply the goods at US $ 335 per MT as per their published price lists. (At this point, the learned Advocates rebut this contention by pointing out that this evidence is not led in the show-cause notice and no copies of the said price lists were made available to the appellants at the original stage.) (b) He submits that since the goods were manufactured in USA and since the manufacturer s price is available on record as US $ 275 per MT as is evidenced by their invoices made out to M/s. Samaha Trading Corporation, London, therefore, that represents the correct price for shipments FOB Los Angeles, (USA) from States to India. He submits that in the present case, the goods were not shipped from U.K. but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this it is clear that no infraction of law have been committed by the present importers, as far as the Letter of Credit is concerned. The learned Advocates also submit that in any case the amendment of Letter of Credit was only with respect to one consignment as the other two consignments were in any case on draft at sight basis. 12. On a careful consideration of the rival submissions and records of the case, including the case-laws cited, we find that the primary and main dispute concerns the alleged under-valuation of the three consignments in question imported by the three appellants noted above. The dispute is reduced to merely whether the import of these goods at a price of US $ 298 CIF Madras represents a correct transaction value under Section 14 of the Customs Act. We are of the considered view that the said price represensents the acceptable transaction value under Section 14 ibid. for the following reasons :- (a) It is not in dispute that the Department has not led any evidence to show the contemporaneous imports at the Port of Chennai from the country of origin (USA) of these goods at any price other than that which was declared in the respective Bills of Entry. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ts was not purchased by one single importer, therefore the said quantity discount was not available. In view of our discussions above, we are not in a position to accept this argument. We have already found that the negotiations were in the form of a package deal by a single indenting agent namely Shri J.S. Metha with a single foreign supplier for the same goods wherein the original contracted quantity was increased from 2000 MTs to 5000 MTs. We also note that the entire consignment was shipped on a single day on the same vessel viz. MV Ranger. Therefore, it is also not a case where the three imports were despatched through various periods of time by the foreign supplier. The impact of this as far as foreign supplier is concerned would be that he could sell almost 5000 MTs of his goods at a single stroke in view of this package deal. (d) As far as the question of quantity discount on such bulk imports is concerned, the percentage of the said discount has been seen in these Judgments to vary. In the case of Mirah Exports (supra), the said percentage was even up to 70%. In this case, the discount works out to less than 12%. In our view, such a marginal discount does not reflect any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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