Custom, Excise & Service Tax Tribunal
M/S International Steel Corporation vs Commissioner Of Customs on 11 May, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad -ooOoo- Appeal No. : C/1068/2006 [ Appn No. C/EXTN(MA)/16397/2014] [ Arising out of OIA-92/JMN/2006 dtd 29.6.2006 passed by Commissioner of CUSTOMS-JAMNAGAR(Appeals) ] M/s International Steel Corporation - Appellant (s) Vs. Commissioner of CUSTOMS- JAMNAGAR(PREV) - Respondent (s)
Represented by:
Appellant (s) : Shri Hardik Modh, Advocate Respondent (s) : Shri S K Shukla, Authorised Representative For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes CORAM :
Mr. P.K.Das, Hon'ble Member (Judicial) Mr. H.K. Thakur, Honble Member (Technical) Date of Hearing / Decision : 11/5/2015 ORDER No. A/10746 / 2015 dtd 11/5/2015 Per : Mr. P.K.Das;
The relevant facts of the case, in brief, are that one M/s Madhav Industrial Corporation, Bhavnagar imported an old vessel M V Dimitriy Mendeleev for a consideration of US $ 9,54,044/- under Memorandum of Agreement (MoA) dated 26.4.2001. The Customs Officer had boarded the Vessel on 1.5.2001. Subsequently, IGM was amended to substitute the appellants name, and declared consideration of US $ 8,45,000/- as per MoA dated 3.5.2001 with the foreign seller M/s Dragon Navigation Inc., Liberia.
2. A show cause notice dtd 22.3.2005 was issued proposing the value for the purpose of assessment of the subject vessel should be US $ 9,54,044/- as per first MoA dated 26.4.2001. It has been alleged that the price initially agreed US $ 9,54,044/-when it was arrived on 30.4.2001 would be accepted and there is no reason to consider the value as per second MoA on 3.5.2001, as it was finalised after importation. The Adjudicating Authority finally assessed the Bill of Entry No SBY/22/2001-2002 dtd 8.5.2001 and confirmed the demand of differential duty of Rs 13,82,097.00 alongwith interest. The Commissioner (Appeals) upheld the adjudicating order and dismissed the appeal filed by the appellant.
3. The Learned Advocate on behalf of the appellant drew the attention of the Bench MoA dated 3.5.2001 between the foreign seller and the appellant. It is revealed from the agreement that the lump sum price of US $ 8,45,000/- was fixed. It is submitted that the earlier buyer have cancelled the MoA and thereafter survey was conducted and on the basis of the survey report dtd 15.5.2001 the transaction value was ascertained. There is no dispute that the declared value is genuine transaction value and therefore the value on the basis of earlier MoA cannot be sustained. He particularly submits the Honble Supreme Court in the case of Chaudhary Ship Breakers Vs CC Ahmedabad 2010.259.ELT.161(SC) on the identical situation held that price actually paid or payable acceptable as transaction value. He also relied upon the decision of the Tribunal in the case of Jai Jagdish Ship Breakers Pvt Ltd Vs CC., Jamnagar -2004.177.ELT.928 (Tri. Del.) held that value mentioned in the addendum of MoA cannot be rejected.
4. On the other hand, the Learned Authorised Representative on behalf of the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the price as available at time of the importation as per earlier MoA would be transaction value. It is further submitted that price would be determined prevailing at the time of importation on 30.4.2001 and the subsequent agreement dated 3.5.2001 is domestic sale which cannot be transaction value. He particularly relied upon the decision of the Larger Bench of the Tribunal in the case of Commissioner of Customs, Bhavnagar, Vs. Lucky Steel and others 2007(02)LCX0429. He also filed compilation of case laws.
5. After hearing both the sides and on perusal of records, we find that M/s Madhav Industrial Corporation entered into agreement with the foreign seller by MoA dated 26.4.2001 to purchase the old Vessel for a consideration of US $ 9,54,044/- and the vessel was arrived on 30.4.2001. After importation of the goods, the foreign seller sold the goods to the appellant as per MoA dtd 3.5.2001 and the value was reduced to US $ 8,54,044/-. Learned Advocate submits that the survey was conducted on 1.5.2001 as evident from the survey report of 15.5.2001 and the appellant have declared the price as per survey report.
6. We are not impressed with the submission of the Learned Advocate. We find that the value was available at the time of importation is US $ 9,54,044/- as per MoA dtd 26.4.2001. There is no reason available for reduction of price in the subsequent MoA dtd 3.5.2001. The appellant filed the Bill of Entry on 8.5.2001. We agree with the submission of the Learned Authorised Representative or the Revenue that the transaction value would be, as declared at time of importation of goods. Hence, the Adjudicating Authority rightly determined the value of US $ 9,54,044/- as per first MoA. The Larger Bench of the Tribunal in the case of Lucky Steel Industries and others (supra) has held that the price mutually agreed upon by the parties at time of import will be relevant and taken into consideration for the purpose of assessment under Section 14 of the Customs Act 1962. The reduction of price after the date of import shall not be taken into consideration for the purpose of determining assessable value. The relevant portion of the said decision is reproduced below :
In a nutshell it is it is held that any reduction in price mutually agreed upon by the parties to the contract prior to the date of import will be relevant and taken into consideration for the purpose of determining assessable value under Section 14 of the Customs Act, 1962. However, if there is any variation in price after the date of import the same shall not be relevant for the purpose of determining assessable value under Customs Act unless the reduction is on account of facts that the goods are not the ones which have been contracted for or that there has been serious breach of the terms of the contract which makes the contract void/voidable. In the latter case the new/ reduced price under the new/revised contract will admissible.
7. The Learned Advocate strongly relied upon the decision of the Honble Supreme Court in the case of Chaudhary Ship Brokers (supra). In that case, the importer imported an old vessel As is whereis basis. After arrival of the vessel, the surveyor submitted report stating that since the side tanks are meant for the receipt/carriage of seawater ballast for the ships stability, the plating over the years undergo heavy corrosion and the ship broker is bound to suffer additional lose and on the basis of filing fresh negotiations take place between the seller and the buyer which resulted in fresh agreement in the form of addendum. The Honble Supreme court remanded the matter to the Tribunal to consider genuineness and necessity of price reduction on the basis of the addenda. In the present case, we find that at the time of import the price was available on the basis of MoA of agreement dtd 26.4.2001. There is no material placed by the appellant for reduction of the price in subsequent MoA. It is noted that after MoA dated 3.5.2001, the survey report dtd 15.5.2001 was issued and such survey report has no relation with MoA dated 3.5.2001. Hence, the said case law would not be applicable.
8. In view of the above discussions, we do not find any reason to interfere the order of the Commissioner (Appeals). Accordingly, appeal filed by the appellant is rejected. The application for extension of the stay order is dismissed as infructuous.
(Dictated and pronounced in the Court)
(H.K. Thakur) (P.K. Das)
Member (Technical) Member (Judicial)
swami
??
??
??
??
2