Customs, Excise and Gold Tribunal - Mumbai
M/S. Polychem Ltd. vs Commissioner Of Customs, New Kandla on 14 May, 2001
ORDER J.H. Joglekar, Member (T)
1. The facts leading to the present dispute are as follows:
In April 1995 the appellants/importers entered into an agreement for purchase of Styrene Monomer at the rate of US$ 650 PMT. The same price was quoted as the ruling market price in the fortnightly publication made in ICIS-LOR. Such periodical reports give the ruling price, details about the confirmed deals, buyers, sellers, quantities and future trends. In terms of the agreements, L/C was opened. Shipments were to be made in September. On 18th of September 1995 the present appellants asked for immediate delivery. However, the suppliers wanted a longer period for completing the supply. At the end of September 1995, the appellants asked the suppliers to redetermine the price in view of the world-wide fall in the price of styrene monomer. Further, negotiations followed. As a result the supplier reduced the price to US$ 470 PMT. The L/C was accordingly amended. In the later half of October 1995, the publication referred to this and also showed the ruling price of such monomer as US$ 460/-PMT. The consignment was imported at the agreed price. The B/E was filed. Show cause notice was issued on 15/12/95 seeking enhancement of price to US$ 650 PMT. In the show case notice citation was made of other imports made at about the same time of the same goods at price ranging between US$ 620 PMT to US$ 650 PMT. After hearing the importers, the Commissioner passed orders enhancing the value but not imposing any penalty on the importers. Hence the appeal.
2. The contention made by the appellants is that effectively the contract was renegotiated and the price at which the imports were made were in terms of the fresh contract. The claim made by the Revenue before us is that there was no renegotiation or fresh contract but what was offered was a special discount. It is claimed that a special discount does not qualify for reduction in the assessable value. Substantial arguments were made by both sides on this aspect and case laws were cited.
3. We have gone through the citations made and the documents placed before us. The Commissioner in his orders placed reliance on the evidence of contemporaneous import. On the contention that in the appellants' case the quantity was higher than those contemporaneous imports, he mentioned that in the case of Polychem Ltd, the total quantity contracted was about 1500 M.T. In the other case M/s. Rajasthan Polymers also the quantity shown to him was approximately the same.
4. Shri Rohan Shah placed very strong reliance on the Supreme Court judgement in the case of Eicher Tractors Ltd vs. CC, Mumbai (2000 (122) ELT 321 (S.C). In this case because there was no buyer for a particular stock of bearings, a very substantial concession was given to the importers. The price was rejected as being lower than the discounted prices shown as per the seller's price list. The Supreme Court went through the Valuation Rules and held that a mandate has been cast upon the authority to accept the price actually paid or payable in respect of the goods under assessment claimed as the transaction value. The Supreme Court cautioned that this mandate was subject to the exceptions quoted in Rule 4(2) of the Valuation Rules. At this stage, we find that the Commissioner's reliance on two judgements is negated by the judgement of the Supreme Court. In the Tribunal's judgement in the case of Ruchi Associates (1992 (59) E.L.T. 155 (Tri) it was held that the burden cast was squarely on the importers to show that the value declared was the transaction value. In the other judgement in the case of Nav Bharat Enterprices pvt. ltd. vs. CCE, Madras (1988 (34) ELT 388 (Tri), the Tribunal held that an exceptionally low price was not acceptable. We find that the case pertains to the import made in 1975 and would not take cognizance of this judgement.
5. In the case of Eicher Tractors Ltd. the Supreme Court discussed the word "payable" occuring in the Rules and held that in a particular transaction, the payability must be examined and that word could not be stretched beyond that particular transaction. The Supreme Court observed that the Customs had to examine any declared value under Rule 3(ii) and Rule 4 of the said Rules and only if it was capable of rejection, the valuation could be determined by going through the rules sequentially. The Supreme Court noted that it was not a case of the Revenue that the appellants/importers had misdeclared the price actually paid nor was there a misdescription of the goods. It was also seen that the case did not fall under the exception stipulated in the Rule relating to acceptance of the transaction value. In paragraph 23, the Supreme Court once again mentioned that it was the burden cast upon the Customs to disclose that the price quoted was not "ordinary sale price.
6. Certain judgements have been cited in the Supreme Court judgement in the case of Eicher Tractors Ltd. The ld.Counsel for the importers cited other judgements. The Supreme Court observation that the burden for proving transaction value was upon the Customs also arises from their judgement in the case of Sounds N. Images (2000 (117) E.L.T. 538 (S.C.)
7. Earlier we have given the gist of the dialogue that preceded that imports. The present appellants had entered into a contract to purchase goods at US$ 650 PMT on the condition that the supply must be made during September. On 19.9.95, the supplier wanted a short postponement in the date of shipment from 20.9.95 to 31.10.95. Thereafter further dialogue followed. The appellants requested to review the price in view of the fall in world-wide price. This request has been shown to be wellfounded by the ld.counsel by showing us the compilation of the fortnightly prices from 11.8.95 to 24.11.95. The price showed a marked fall in the first week of Sept. 1995. The reduction continued and was at US$ 450 PMT at the middle of October, 1995. On 18.10.95, the suppliers had agreed to the reduction and despatched the goods. What the summary of events shows is that effectively the contract was renegotiated at a lower price. The phrase used by the appellants in their message dated 29.9.95 to the supplier read as follows:-
We, therefore, request you to consider PCL's position at your end and offer some concession/discount in quoted price. (emphasis added)
8. Shri. A.K. Jain submits that in the case of Pudu Sales Corporation vs. CC (1993 (66) ELT 35 (S.C), the Supreme Court held that specially quoted prices were not accepted. This was referred to by the Supreme Court in the judgement in the case of Eicher Tractors Ltd. supra. In distinguishing the facts in paragraph 22, the Supreme Court noted that in the case of Pudu Sales Corporation, there was a misdeclaration of goods which was not in the case of Eicher Tractors Ltd. In the present proceedings also it is nobody's case that there was any misdeclaration. We have also seen the judgement of the Tribunal in the case of J.K. Industries Ltd. vs. CC (1999 (107) ELT 329 (Tri). The facts are akin to the facts before us. The prices were negotiated. The letter of credit was accordingly opened. Subsequently the international prices had fallen. The goods were imported at a reduced rate. The Customs had not agreed to the reduced price. The Tribunal observed that the reduction was on mutual agreement on the fact having been established that the world-wide prices were fallen. In the present case, we find that the fall in world-wide prices was documented and framed the basis of negotiations between the two parties.
9. Some doubt would arise on perusal of the price at which the same goods were supplied presumably by the same supplier to the other importers at the same time at prices ranging between US$ 620 to US$ 650 PMT. Shri Jain took advantage of this and stated that this would indicate that the prices in the present importers were specially reduced. We have earlier held to be not so. The reasons why the other importers had not renegotiated the prices are not known to us nor are they material in view of the holding of the Supreme Court in the case of Eicher Tractors Ltd. that the transaction value has to be regarded in each individual transaction.
10. On perusal of the case laws and the facts, we find that there was no valid ground for the enhancement of the price as made by the Customs. The appeal is allowed with consequential relief if any (Dictated in Court)