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TMI Blog2023 (10) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... at value of the imported goods for the purpose of levy of Customs duty shall be the transaction value of the imported goods which is paid at the time of importation. It is found that transaction value is decided between the supplier of the goods and the buyer, which is importer in this case declared on the bills of entry for the purpose of assessment of the customs duty. The importer has opened a Letter of Credit in favour of the supplier of vessel which is for the amount indicated in MOA. The transaction value which have been declared on the bill of entry is the invoice value for which letter of credit through a recognized banking system has been opened. There is no evidence to suggest any extra payment to the supplier of the vessel except the invoice value - the invoice value is the true transaction value in this case and there is no element of misdeclaration of value. Levy of penalty u/s 112 (a) (b) and Section 114AA of the Customs Act, 1962 - HELD THAT:- These penalties have primarily been imposed by the learned Adjudicating Authority holding that transaction value has been misdeclared. Since it is already held in the preceding paras that charges of misdeclaration are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Basil under Section 110 of the Customs Act, 1962 on 25.03.2011, on the charges that the value of the imported vessel has been misdeclared and therefore, the said vessel is liable for confiscation as per the provisions of Section 111 of the Customs Act, 1962, the vessel was confiscated. On the request of the cash buyer, the seized vessel was released provisionally to the cash buyer on 10.05.2011. 3. After detailed investigation a show cause notice dated 16.09.2011 was issued in the matter by the Commissioner of Customs (Preventive) Jamnagar. The learned Commissioner vide impugned order-in-original No. 07-COMMISSIONER-2012 dated 26.09.2012 has held as under:- (i) The Vessel MV Basil in ordered to be confiscated under Section 111 (of of the Customs Act, 1962. Since the said Vessel has already been provisionally released, the redemption fine of Rs 30 Lakhs imposed on M/s. Bnow Drop Co. Ltd, Belgium under Section 125 of the Act. (ii) The B.E. No. 356/2010-11 dated 25.03.2011 in ordered to be finalised by the proper officer considering the transaction value as per MOA dated 11.10.2010 reflecting the price of USD 6,368,295/- Since the importer has already paid duty on the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a petty amount of Rs. 13,15,956/-. 5. Learned advocate has contended that for the purpose of Section 14 of the Customs Act, 1962 what is relevant for establishing the transaction value in terms of legal provisions is the price which is to be paid by the importer namely M/s. Shirdi Steel Traders to the supplier of the vessel M/s. Snow Drop Company Limited. The price for which the import invoice issued by the supplier and for which the legal Letter of Credit has been opened by the importer are only relevant documents. It is wrong on the part of the department to hold that there is mis-declaration of the value when a letter of credit is opened by the importer in favour of the exporter for the declared value of USD 61,93,271/-. Learned advocate has taken us through various contracts to point out that the agreement dated 11.10.2010 between the owner of the vessel M/s. Diva Meritime, Marshall Islands and M/s. Snow Drop Company Limited, Belgium mentions the price of the vessel at USD 63,68,295/-. The appeal papers at page No. 227 also have another MOA dated 11.10.2010 between M/s. Diva Meritime, Marshall Island and M/s. Snow Drop Company Limited wherein the price of the vessel ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely M/s. Snow Drop Company Limited indicated the price of the vessel at USD 63,68,295/- was also changed on the same date to USD 61,31,400/- and therefore, the reliance of the department on the value mentioned in the earlier MOA is of no use as the same was changed on the same date and MOA is duly signed by both the parties. Learned advocate has emphasized that what is important is the agreement which has been signed by supplier and importer of the vessel and the price agreed between the supplier and the importer which is USD 61,31,400/- and same is the actual transaction price which has been paid by the importer through nationalized bank by opening a Letter of Credit. Hence there is no mis-declaration of the value of imported vessel namely MV Basil and the allegation made by learned Commissioner is not legally tenable. 8. We have also heard Shri Himanshu P Shrimali, learned Superintendent (AR) who reiterated the findings given in the impugned order-in-original. He relied upon the following decisions:- (a) International Steel Corporation vs. CC, Jamnagar 2015 (325) ELT 881 (Tri. Ahmd) (b) CC, Bhavnagar vs. Lucky Steel Industries- 2007-TIOL-2182-CESTAT-AHM (c) CC, B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is USD 61,31,400 (CIF). 10. Before proceeding further, it will be relevant to have a reference to the legal provisions with regard to the imported goods. The Section 14 of the Customs Act, 1962 provides as follows:- 14 Valuation of goods . (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf. It can be seen from the above provisions that as per Section 14 of the Customs Act, 1962 that value of the imported goods for the purpose of levy of Customs duty shall be the transaction value of the imported goods which is paid at the time of importation. We find that transaction value is decided betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties agree upon a price adjustment promptly, even if there is nothing in writing between them on the subject, the Customs should accept the adjusted price as the basis for transaction value. 12. Per contra, Mr. V. Shekhar, learned senior counsel appearing for the revenue, supported the order of the Tribunal. Learned counsel emphasised that in the absence of any stipulation in the MOA for reduction in the agreed price, the revised price mentioned in the addendum is of no consequence for the purpose of Section 14 of the Act. 13 . At the outset, we may note that the decision of the Tribunal in Atam Manohar (supra) was questioned by the revenue before this Court in Civil Appeal No. 146 of 2004 [2009 (233) E.L.T. 145 (S.C.)]. While allowing the appeal and setting aside the order of the Tribunal primarily on the ground that the addendum was a self-serving document, the Court observed thus : We may also point out that in this case we are basically concerned with the genuineness of the addendum to the MOA dated 13th April, 1999. If one looks at the said addendum, we find that the date on which the said addendum stood executed is not given. Further, when did the addendum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f imported goods is to be determined in accordance with the Rules framed in this behalf. Under Rule 3(i) of the 1988 Rules, the value of the imported goods shall be the transaction value . Transaction value has been defined in Rule 2(f) as meaning the value determined in accordance with Rule 4. Rule 4(1), in turn, states that the transaction value of the imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these Rules. It is clear from a conjoint reading of Rule 3(i) and Rule 4(1) that the adjudicating authority is bound to accept the price actually paid or payable for the goods as the transaction value, except where exceptions enumerated in Rule 4(2) are attracted, which is not the case here. It is, therefore, manifest that both Section 14(1) and Rule 4 provide that in the absence of any of the special circumstances indicated in Section 14(1) and particularised in Rule 4(2) of the 1988 Rules, the price paid by an importer to the seller in the ordinary course of commerce is to be taken as the transaction value for the purpose of valuation of goods. 16 . Having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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