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TMI Blog2014 (8) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... in this provision are having the importance to ascertain the transaction value. The words neither ‘sale' nor ‘delivery' are defined under the Customs Act, 1962 but the same are defined under the Sale of Goods Act, 1930 - there is no doubt that there was no transfer of possession from the shipper to the earlier consignee to arrive at the decision that goods were delivered. As the documents of title were returned back by the earlier importer to the supplier accepted and unpaid, the agreement to sale could not become sale as per Section 4(4) of the Sale of Goods Act, 1930. Therefore, the said price was neither paid nor payable. In these circumstances, the said price cannot be said to be the price of the goods in question. As per Rule 10(1 )( e) of the Valuation Rules, 2007, the amount which paid over and above the invoice price is required to be added to assessment. As discussed above also, the transaction value is the price actually paid or payable to the supplier. In this case, the transaction value is the price paid by the appellant to the supplier plus the demurrage charges till 06.11.2008 paid by the appellant on behalf of the supplier for importation of the goods in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case are that the appellant imported HR Coils from M/s. Intercon Holdings Ltd., Hong Kong at a declared price between USD 442 PMT to USD 445 PMT. It was found that some importers imported the said goods under IGM no. 29197 dated 04.10.2008 and filed bills of entry showing the price at the rate of USD 938 PMT. The present importers had entered into a contract on 06.11.2008 with foreign supplier after landing of goods in the land mass of Indian Territory at the price of their favour. These goods were presented for assessment on declared value i.e. USD 442 PMT or USD 445 PMT. The assessing authority objected to the price declared as the original importer had imported the goods at price of USD 938 PMT. The said matter was referred to SIIB (Import) and it was found that the value of the impugned goods is very low as declared by the original importer. The goods were allowed to be released provisionally as these goods were incurring heavy demurrage charges. During the pendency of the final assessment, the importers approached the Settlement Commission under 127C of the Customs Act, 1962 against the loading of the value. The Settlement Commission ordered a refund of the excess duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) which never got converted in sale', (iii) which never entitled the earlier consignee to seek delivery' at the place of importation into India, (iv) In respect of which the Bill of Entry filed by the earlier consignee was cancelled by the proper officer, and by amending the IGM his name was removed and the appellants' names were inserted as imported/consignee'. 5. He further submits that eh Valuation of the goods are to be determined as per Section 14 of the Customs Act, 1962. As per the said provisions, neither the word sale' nor the word delivery' is defined under the Customs Act, 1962. Both the words, however, are defined under the Sale of Goods Act, 1930. As per the Sale of Goods Act, 1930, delivery means voluntary transfer of possession fr om one person to another . 6. Section 4 of the said Act further deals with contract of sale which is as under: Contract of Sale 4. Sale and agreement to sell (1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a price. There may be a contract of sale between one part-owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipper. 9. He further relied on the decision of the Apex Court in Garden Silk Mills Ltd., 1999 (113) ELT 358 (SC) He further submits that the Constitution Bench of Hon'ble Supreme Court in the case of J.V. Gokal Co. (Pvt.) Ltd. 1999 (110) ELT 106 (SC) has observed that the concerned sale to the Appellants which occasioned the import is a sale in the course of import, and it is also thus evident that the Bill of Lading conferred the title of the goods to the Appellants and transfer thereof to the Appellants operated as the transfer of the goods and delivery to the Appellants. He further submits that, in case of CC vs. Rai Metal Works Ltd., 2010 (259) ELT 488 (SC), the Hon'ble Supreme Court held that when the genuineness of the addendum in contract, by which the original price was reduced, was not in doubt, the transaction value cannot be disputed. As in the instant case, the Contracts dated 06.11.08 are not in doubt. Therefore, the transaction value as determined under Rule 10(1 )( e) as per the Contract ought to have been accepted as assessable value. 10. He further submitted that in the case of CC vs. Metalman Pine Mfg. Co. Ltd. , 1997 (91) ELT 382 (Tri.), this Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Clause (III) of first proviso to Section 14 stipulates that the rules made in this behalf may provide for acceptance or rejection of value declared by the importer on exporter as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value and determination of value for the purpose of this section. Rule 12 of the Valuation Rules deals with rejection of transaction value. Therefore, the main question is that whether the value can be rejected under Rule 12. As per Clause (iii) of explanation under Rule 12, if contemporary import of identical or similar goods is noticed at the higher price, invoice value can be rejected and same can be determined under Rule 5 to 9 of the Rules. Rule 10A (Now Rule 12) has been inserted in February 1998 in Customs Valuation Rules to give effect to Ministerial decision 6.2 of the WTO Agreement Committee for rejecting the transaction value on the doubt of truth or accuracy of value. Contemporary imports of identical goods originating from same country and supplied by the same supplier in the same vessel has been noticed at USD 938 PMT as imported by following importers - M/s. Shah Brothers, M/s. Amishkumar M/s. D. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r importer who filed bill of entry for clearance but subsequently declined to clear and the same was cleared by the appellants by reducing the price in subsequent bills of entry on the ground that they negotiated the price with the supplier after backing out by the original importer. 15. It is further submitted that the importer have relied on the decision of Metalman Pine Mfg. Co. Ltd. (supra) to support this case. The said case is distinguishable from the facts of the case as in that case the price had been negotiated before the import Into India, whereas in the instant case the price had been negotiated after the goods had been imported into India and bill of entry for clearance had been filed by the initial importer. It is further submitted that that the facts of case of Excel Glasses Ltd. (supra) are different from the facts of this case as much as the goods are shipped on vessel on 31.07.1997 and due to adverse climatic condition the vessel was delayed, crew was not paid their wages, and took the vessel to Singapore. The vessel was sold to another party, who brought the cargo to Tuticorin . In view of the undue delay of cargo, the original indentor sold the goods on high s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant is correct or not? 22. The Adjudicating Authority has doubted on the transaction value on the ground that initially the goods were imported @ USD 938 PMT, therefore it was doubted that when the goods were imported in India @ 938 PMT the value declared by the appellants is not correct. In these circumstances, the Adjudicating Authority rejected the transaction value and sought to load the value as per the contemporaneous imports of the said goods initially imported in India by the importers in the month of September 2008. TO know the correctness of the value loaded by the Adjudicating Authority on the basis of contemporaneous imports, we have to see whether the goods imported by the present appellants are at the relevant time or not. Admittedly in this case, the goods were imported by the appellants in the month of November 2008 through a contract dated 06.11.2008 on the prevailing international market price at that time. These facts are not in dispute. Therefore, the value adopted by the Adjudicating Authority to assess the goods in question is not correct as the value of the imported goods at the time of importation by the appellant is lower than the price at which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplier in order to compensate the importer for demurrage incurred after landing. Therefore, the said agreed price was not acceptable. In this case also the facts are similar to the case of Steel Strips Ltd. and the appellant may offer to the Adjudicating Authority to pay the duty on declared value plus demurrage charges paid on the goods by the appellants, as same is the price payable to the supplier by the appellants as per the agreement dated 06.011.2008. In this case, the appellants had paid the invoice price to the supplier and demurrage charges to the concerned authorities on behalf of the supplier. The same is the real value of the goods in question. But the Adjudicating Authority has held that the duty on demurrage charges is not payable. Therefore, same are not required to be added in the transaction value. 27. In view of these observations, the case of Steel Strips Ltd. also supports the case of appellants before us. 28. We further find that as per Section 14 of the Customs Act, 1962, which is reproduced herein:- SECTION 14. Valuation of goods. - (1) For the purposes of the Customs Tariff Act, 1975, or any other law for the time being in force, the value of the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the price actually paid or payable. 30. As per Rule 10(1 )( e) of the Valuation Rules, 2007, the amount which paid over and above the invoice price is required to be added to assessment. As discussed above also, the transaction value is the price actually paid or payable to the supplier. In this case, the transaction value is the price paid by the appellant to the supplier plus the demurrage charges till 06.11.2008 paid by the appellant on behalf of the supplier for importation of the goods in question. Therefore, the transaction value in this case is invoice price plus demurrage charges accumulated till 06.11.2008 i.e. date of contract. 31. We also find that the issue came up before the Hon'ble Apex Court in the case of Garden Silk Mills Ltd. (Supra) wherein it is observed as under: 12. All imported goods unloaded in a customs area are required to remain under the customs authorities until they are cleared for home consumption or are warehoused or are transshipped (Section 45). The goods can be cleared by the importer only after, as provided by Section 46 , the importer files a bill of entry for home consumption or warehousing pursuant to which clearance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were entered into between the sellers of the ship and the importers reducing the negotiated price on account of certain shortcomings and missing parts. The short controversy is whether or not the reduced price mentioned in the addendum has any bearing on the determination of the value of the ship for the afore-stated purpose. To appreciate the rival stands, it would be expedient to state the facts in Civil Appeal No. 147/2004 as illustrative, with brief reference to the material details in each of the other appeals, in the latter part of this order. 3. The importer viz. M/s. Rai Metal Works imported an old vessel under an MOA dated 27 th January 1999 with M/s. Sea Crest Shipping Inc. Per the MOA, the purchase price of the said vessel was agreed upon at US $ 5 ,09,190.50 at the rat of US $ 108.50 per long ton and the Light Displacement Tonnage (LDT) of the vessel was represented at 4693 long tons. As per Clause 1 of the MOA, the vessel was to be delivered at the outer anchorage with available outfit, equipment anchors and chains in safely afloat condition, free of charter, free of cargo on the basis of delivery under own power. The said clause provided for price adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the goods when sold for export to India adjusted in accordance with the provisions of Rule 9. Accordingly to the Commissioner (Appeals) in the instant case originally the transaction was between M/ s.Kopran Ltd. and M/s. Quingdao Soda Ash Industrial Co. and this original transaction had all the attributes of a transaction during the course of international trade. Therefore the price originally paid by M/s. Kopran Ltd. to the overseas supplier has to be taken as the transaction value. Even through the assessee has placed reliance on two decisions of the Tribunal, namely, Sanjay Chandiram vs. CC - 1991 (52) ELT 413 and Godavari Fertilisers Chemicals Ltd. V. CC, Visakhapatnam - 1996 (81) ELT 535 the Commissioner took the view that the ratio of those decisions are not applicable to the facts of the case. 4 ..We find merit in the contention raised by the appellant. Section 14(1) of the Customs Act provides that the value of such goods imported shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation or exportation (emphasis supplied) .. 5. The Commissioner (Appeals) was not ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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