9911796707
TMI Blog2005 (2) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Service Tax Appellate Tribunal, West Zonal Bench at Mumbai (in short 'the Tribunal'). 2.The factual background leading to the dispute as noted by the Tribunal in essence is as follows : Pride Foramer (the respondent No. 2 in Civil Appeal Nos. 808-810 of 2004 and sole respondent in Civil Appeal No. 811 of 2004) (hereinafter referred to as the "assessee") was the owner of oil well drilling rigs and drill ships which it leased out to parties engaged in oil exploration or exploitation. It entered into a contract with the Oil Natural Gas Commission (in short 'ONGC') in January 1999 for lease to the latter of a jack-up rig of 300 ft depth to be utilized for oil exploration and exploitation off the coast of India. The assessee was not originally owner of the rig and in order to comply with the terms of the contract, purchased in March 1999 the rig Pride Pennsylvania from Pride Global Limited, a company registered in the British Virgina Islands at a price of US $ 17 millions. The rig was being deployed for off sea exploration in accordance with the directions of the hirer, i.e. ONGC, and did not initially enter either Indian territorial waters or any areas of the exclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 lakhs on Bureau Veritas. 4.After confirmation of duty he directed appropriation of Rs. 10 crores against the same. Payment of interest @ 24% under Section 28 AB of the Act was demanded from July 2000. Penalty of Rs. 29,45,19,057/- was imposed and separate penalties under Section 112(a) of the Act were imposed on Bureau Veritas and Jean Paul Rabier. 5.The Commissioner found that the transaction value in terms of Rule 4 of the Customs Valuation Determination of Price of Imported Goods Rules, 1988 (in short the 'Rules') of the rig was the price paid for its purchase in March 1999 by the importer of US $ 17 millions. The purchase was made by the assessee to bring the rig into India so that it could fulfill the contract that it signed in January of the year with ONGC. He declined to accept the declared value on the ground that the buyer, Pride Foramer and seller, Pride Global Ltd. were related parties, each of them being a subsidiary company of Pride International Inc. He noted that the rig was purchased in 1997 by Pride International Inc from Cartier Shipping Co. at US $ 35.35 millions. He did not accept the report by Bureau Veritas issued in March 2000 valuing the rig at US $ 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction value was not influenced by the relationship. The drop of the price cannot be explained merely by changes in oil price. 8.The appeals against the order of the Commissioner filed by these persons and by the Commissioner were disposed of by the impugned order. 9.The Revenue also preferred an appeal against that part of the Commissioner's order by which the proposed additions for alleged value additions were rejected. 10.The Tribunal noted that both Revenue and the assessee agreed that the declared price is the transaction value and they also agreed that the seller of the rig and the purchaser were related. Therefore, the only issue, to be adjudicated was whether the transaction value is to be accepted and, if not, by what method of assessment value of the rig has to be determined. After referring to various rules the Tribunal referred to data indicated in reputed publications indicating periodical change of value of rigs. After noticing various details the Tribunal came to the conclusion that there were noticeable fluctuations in prices and there were sometime violent fluctuations. With reference to day-rates, it came to hold that there was a relationship between da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ications and the affidavit of Mr. Strachan, it could not have been held that the value disclosed was the market value. The Commissioner had noted that at different point of time in the bid documents of higher values were shown and nothing has been indicated as to what was the need for sell by Pride Global Limited and if the assessee had indicated the price to be US $ 27 millions, how it became 17 millions US dollars within a period of 25 days. It has not been indicated what was the need for sale and purchase of rig between two related persons. Rule 4 has application only when the transaction leads to import. Therefore, it was not a case of transaction value and the Tribunal's view cannot be sustained. 12.In response, Mr. Dushyant A. Dave learned counsel for the assessee-respondent submitted that right from the show-cause notice stage stand of the Department was that the price indicated was the transaction value which was not to be accepted because the transactions were related. The assessee could not have benefited by showing a lesser figure when the customs duty was payable by ONGC. It was not the case of Revenue that ONGC and the assessee colluded to show a lesser figure. As a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss and examine the materials brought on record. It placed reliance on the evidence adduced by the assessee with reference to various journals the acceptabi1ity and the credibility of which was never questioned by the Revenue. It also referred to the affidavit of experts. 16.The ambit and method of Rule 4 was elaborately dealt with by this Court in Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai [2000 (122) E.L.T. 321]. 17.It is true that the Rules are framed under Section 14(1-A) and are subject to the conditions in Section 14(1). Rule 4 as in fact directly relatable to Section 14(1). Both Section 14(1) and Rule 4 provide that the price paid by an importer to the vendor in the ordinary course of commerce shall be taken to be the value in the absence of any of the special circumstances indicated in Section 14(1) and particularised in Rule 4(2). 18.Rule 4(1) speaks of the transaction value. Utilisation of the definite article indicates that what should be accepted as the value for the purpose of assessment to customs duty is the price actually paid for the particular transaction, unless of course the price is unacceptable for the reasons set out in Rule 4(2). "Payable" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stood, as in most of financial measures where the expressions are not defined, not in a technical or preconceived basis but on the basis of trade understanding of those who deal with these goods as mentioned hereinbefore. The Tribunal proceeded on that basis. The Tribunal has not ignored the Technical Committee's observations. We have noted in brief the Tribunal's handling of that report. The Tribunal has neither ignored the observations of CCCN nor the Board's Tariff Advice. These observations have been examined in the light of the facts and circumstances of the case. One of the basis factual disputes was long length of sliver tops. Having regard to the long length, we find that the Tribunal was not in error. Whether a particular item and the particular goods in this case are wool wastes, should be so considered or not is primarily and essentially a question of fact. The decision of such a question of fact must be arrived at without ignoring the material and relevant facts and bearing in mind the correct legal principles. Judged by these yardsticks the finding of the Tribunal in this case is unassailable. We are, however, of the view that if a fact finding authority comes to a con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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