Customs, Excise and Gold Tribunal - Calcutta
Tirumala Bearing Pvt. Ltd. vs Commissioner Of Cus., Visakhapatnam on 16 January, 2002
Equivalent citations: 2002(141)ELT433(TRI-KOLKATA)
ORDER G.R. Sharma, Member (T)
1. In the impugned order the ld. Commissioner of Customs held, "Accordingly, I order that the assessable value of the goods in question shall be determined as Rs. 35,86,846/- (rupees thirty-five lakhs eighty-six thousand eight-hundred forty-six) and the goods may be released on payment of appropriate duty as applicable. I do not propose to confiscate the goods or to impose any penalty on the importers. However, the importers are warned that such leniency will not be shown in future if such misdeclaration of value is repeated."
2. The facts of the case in brief are that the appellants filed bill of entries for clearance of 36 varieties of bearings declaring different values according to the type of bearing. Scrutiny of import documents submitted by the importer revealed that the values declared were different when compared with the manufacturers' list prices available with the department.
3. The goods were examined under the first appraisement procedure and as per examination report the goods appeared to be 5-10 years old, but not used and not second-hand. According to the manufacturers' price list the value of the imported bearings was worked out to be Rs. 35,86,846/- (rupees thirty- five lakhs eighty-six thousand eight hundred forty-six) after extending the maximum 35% discount vis-a-vis value declared by the importer at Rs. 15,64,427/- (rupees fifteen lakhs sixty-four thousand four hundred twenty- seven). It was therefore alleged that there was misdeclaration of value and the goods were liable to confiscation. The importers stated that the supplier had given them a special discount to clear old stocks of 5-10 years. They contended that there was no under-invoicing of value and the invoices were correct and genuine. It was also submitted by the appellants that they had been given special discount on purchase of old stocks of 5-10 years old.
They also submitted correspondence etc. After examining all the contentions the ld. Commissioner held as indicated above.
4. Arguing the case for the appellants Shri S. Dasgupta, ld. Adv. submits that in the instant case the foreign supplier of bearings allowed special discount to the appellants as the goods were old and the foreign supplier wanted to clear old stocks; that the practice was commercially acceptable which was resorted to by the manufacturer in the normal course of business; that the manufacturer by its special offer had proposed and in fact had allowed a special discount to the appellant over and above the maximum discount of 35%. It was contended for the appellants that the value of old stocks and the discounts offered at the time of clearance sales cannot be compared with the value of new goods in the normal course of sale; that the true meaning and purport of Rules 3, 4(1) and 4(2) of the Customs (Valuation) Rules, 1988 was not appreciated but also acted on the basis of manufacturers' price list as if a price list is invariably proof of transaction value in respect of a particular transaction. The ld. Counsel submits that similar issue came up before the Hon'ble Supreme Court in the case of Etcher Tractors Ltd., Haryana v. CC, Mumbai [2000 (122) E.L.T. 321 (S.C) = AIR 2001 SC 196] where the Hon'ble Supreme Court held :-
"21. In the case before us, it is not alleged that the appellant has misdeclared the price actually paid. Not was there a misdescription of the goods imported as was the case in Padia Sales Corporation (AIR 1993 SCW 2669 : AIR 1993 SC 2411). It is also not the respondent's case that the particular import fell within any of the situations enumerated in Rule 4(2). No reason has been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of vendor. In doing so, the Assistant Collector not only ignored Rule 4(2) but also acted on the basis of the vendor's price list as if a price list is invariably proof of the transaction value. This was erroneous and could not be a reason by itself to reject the transaction value. A discount is a commercially acceptable measure which may be resorted to by a vendor for a variety of reasons including stock clearance. A price list is really no more than a general quotation. It does not include discounts on the listed price. In fact, a discount is calculated with reference to the price list. Admittedly in this case discount up to 30% was allowable in ordinary circumstances by the Indian agent itself. There was the additional factor that the stock in question was old and it was a one-time sale of 5 years old stock. When a discount is permissible commercially, and there is nothing to show that the same would not have been offered to any one else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1)."
5. The ld. Counsel submits that their case is squarely covered by this decision of the Apex Court and therefore prayed that the appeal may be allowed.
6. Shri T.K. Kar, ld. SDR appearing for Revenue submits that the bearings no doubt were 5 or 10 years old, but they were not used or secondhand and therefore the authorities below have rightly enhanced the value of the imported bearings for purpose of computation of duty. He reiterates the findings of the Commissioner.
7. We have heard the rival submissions. We have also perused the case law cited and relied upon by the appellants. We note in the instant case that the admitted position is that the bearings were 5-10 years old and it was stock clearance sale whereunder to clear the stocks the manufacturers give very high discounts which are much higher than the normal discounts in the usual course of business. In the instant case we find that no evidence has been brought on record to show that the transaction value of the goods was different than the one declared by the importer. Reliance on the manufacturers' price list for the goods cleared on stock sales is not correct as was held by the Apex Court. We note that the ratio of the decision of the Apex Court is squarely applicable to the facts of the present case. In the circumstances following the ratio of the Apex Court's decision cited and relied upon by the appellants we hold that the value declared by the appellants was the correct transaction value. In the circumstances the impugned order is set aside and the appeal is allowed. Consequential relief, if any shall be admissible to the appellants in accordance with law.