Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of Customs vs Pushpanjali Silks Pvt. Ltd. on 20 March, 2006
ORDER P.G. Chacko, Member (J)
1. The respondents had imported 9095 kgs. of what was declared as "mulberry raw silk (3A) & (4A) grade of Chinese origin" and filed a Bill of Entry dated 15-9-2005 for its clearance, declaring its unit price as USD 13.5 per kg. The goods were examined and samples thereof tested, whereupon it was confirmed that the goods were of the same grade as declared by the importer. However, the above declared price, which was based on a contract dated 17-2-2005 between the importer and the foreign supplier, was proposed to be rejected by the department having regard to higher contemporaneous price available for identical goods from the same country of origin. The essential particulars of the 'contemporaneous" imports were furnished to the assessee and the same are as under: -
S. B.E. No. &Date Despn./Grade Unit Price USD/KG Quantity No.
(Kgs.)
1. 106011/18-8-05 MRS-3A/4A 22.70 9142.86
2. 106010/18-8-05 -do- 22.36 9058.99
The adjudicating authority overruled the assessee's objections and enhanced the unit price of their goods to USD 22.36 per kg. under Rule 8 of the Customs (Valuation) Rules, 1988 on the basis of the above data relating to "contemporaneous" imports. The authority relied on the Hon'ble Supreme Court's judgment in Rajkumar Knitting Mills Pvt. Ltd. v. Collector . In appeal, learned Commissioner (Appeals) distinguished the case of Rajkumar Knitting Mills (supra) and took the view that the ruling of the apex Court in Etcher Tractors Ltd. v. Commissioner was applicable. Accordingly, the appellate authority rejected the "contemporaneous" price and accepted the price of USD 13.94 per kg. (C1F) as basis of assessable value of the goods in question, having found that 60% of the contracted quantity of mulberry raw silk had been cleared earlier by the assessee at unit price USD 13.94 per kg. In the present appeal, the Department (appellant) has mainly contended that, as the "abnormal difference" between the declared price and the "contemporaneous" price of identical goods was not satisfactorily explained, the declared price attracted Rule 4(2) of the Customs (Valuation) Rules and hence did not merit acceptance under Rule 4(1). Supplementing this ground of the appeal, learned SDR has pointed out that the assessee had agreed for enhancement of value from USD 13.5 to USD 13.94 per kg. (GIF) in respect of a major part of the contracted quantity of mulberry raw silk, cleared prior to 15-9-2005. Learned Senior Advocate for the respondents has countered by submitting that such enhancement was agreed to, without prejudice to the assessee's right to have the transaction value accepted in the event of a 'lis'. Relying on the Tribunal's decision in the cases of Andhra Sugars Ltd. v. Commissioner and Agarwal Industries v. Commissioner , learned Senior Counsel has urged that the apex Court's ruling in Eicher Tractors (supra) be followed in preference to Rajkumar Knitting Mills (supra) on account of change of the relevant statutory provisions. According to learned Counsel, none of the factors or circumstances particularised under Rule 4(2) existed in the present case and therefore there was no option for the assessing authority but to accept the transaction value of the goods under Rule 4(1). Learned SDR referred to the relevant statutory provisions and endeavoured to show that the amendment to Rule 4 (dealing with transaction value) of the Customs (Valuation) Rules, which was referred to by learned Senior Advocate, was inconsequential insofar as the facts of this case were concerned. On this basis, learned SDR argued, the apex Court's ruling in Rajkumar Knitting Mills (supra) was applicable and accordingly the contracted price of the goods was liable to be rejected. She prayed for setting aside the impugned order and restoring the order passed by the original authority. At this juncture, learned Senior Advocate pointed out that the original authority had chosen to value the goods under Rule 8 (residual method) thereby virtually conceding that the assessable value of the subject goods could not be determined under any of the preceding rules.
2. We have given careful consideration to the submissions. It appears from the records that the assessee was given an opportunity to produce the manufacturer's invoice or other documentary evidence in support of the declared price of the subject goods but could not furnish any such evidence. Apparently, in such circumstance, the original authority, under Rule 10A of the Valuation Rules, took the view that assessable value of the goods could not be determined under Sub-rule (1) of Rule 4. The authority, therefore, rejected the declared price under Rule 8 of the Valuation Rules. But the residual method provided under Rule 8 could be resorted to only where the assessable value of the goods could not be determined under any of the preceding rules including Rule 5 whereunder transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued could be adopted as the assessable value of the latter goods. By adopting unit price of USD 22.36 per kg. of identical goods cleared under two Bills of Entiy dated 18-8-2005, as the assessable value per unit quantity of the subject goods, the original authority was invoking Rule 5 of the Valuation Rules. It was not open to that authority to invoke Rules 8 and 5 at the same time inasmuch as Rule 8 was applicable only when the assessable value could not be determined under the provisions of any of the preceding rules including Rule 5. Thus, obviously, the decision taken by the original authority was fraught with dichotomy. Coming to the order passed by learned Commissioner (Appeals), we find that the assessable value was determined in the light of the apex Court's ruling in Eicher Tractors (supra). Eicher Tractors Ltd., manufacturers of tractors and tractor engines in India, used to import bearings for their tractors and tractor engines from a Japanese company since 1955. In 1988, they started procuring such bearings by local purchase from M/s. HMT Ltd. The Japanese vendor had a stock of bearings, which was expected to be lifted by Eicher Tractors Ltd. That stock was offered to Eicher Tractors Ltd. at concessional price of Japanese Yen 826 per piece and the same was accepted by the company, which accordingly placed an order on the Japanese vendor on 17-4-1993. Eicher Tractors Ltd., filed Bill of Entry dated 3-12-1993 [accompanied by Invoice dated 6-10-1993] with the Customs authorities for clearance of the goods. The original authority, upon finding that the declared price was lower than the one mentioned in the vendor's price list, refused to accept it as normal price under Rule 4 of the Customs (Valuation) Rules read with Section 14 of the Customs Act. It enhanced the price of the bearings to Japanese Yen 2507 per piece under Rule 8 on the basis of the vendor's price list coupled with permissible discounts. The appeal preferred against the Assistant Collector's decision was allowed by the Collector (Appeals). But, in course of time, the order of the appellate authority came to be set aside by this Tribunal in an appeal filed by the Department. This was the circumstance in which the apex Court happened to deal with the dispute in a civil appeal filed by the assessee. Their lordships noted that: (i) the department had not alleged that the assessee had misdeclared the price actually paid, (ii) the assessee had not misdescribed the goods; and (iii) the department had no case that the particular import fell within any of the situations enumerated under Rule 4(2) of the Valuation Rules. It was also noticed that no reason had been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of the vendor. The Hon'ble Court proceeded to hold that the price list was no more than a general quotation, which did not preclude discount on the listed prices. When a discount was permissible commercially, the same would have been offered to anyone wishing to buy the old stock. As a matter of fact, discounts upto 30% were allowable as per the contract between the Japanese company and their Indian agent. In the circumstances, it was held that there was no reason why the declared value was not acceptable under Rule 4(1). We are of the considered view that the apex Court's ruling was rightly followed by learned Commissioner (Appeals) in the present case. The subject goods were imported in terms of a contract indicating USD 13.50 as the unit price agreed between the contracting parties the import was made within the contracted period. The department has that any amount over and above the contracted price was paid by the importer to the supplier, nor is it their case that the 'importer was "related" to the supplier or that the price paid was influenced by any extra-commercial considerations. In the circumstance, there is no valid reason to reject the transaction value of the goods under Rule 4(1) read with Section 14. This is particularly so, as the appellant has not established that any of the special circumstances particularised under Rule 4(2) existed in this case.
3. Learned SDR has heavily relied on the Supreme Court's judgment in Rajkumar Knitting Mills' case (supra), wherein it had been held that the assessable value of the imported goods had to be determined on the basis of the price as on the date of importation and not on the basis of the price as on the date of contract. Apparently, this ruling permitted the assessing authority to make enquiry in the international market to find out contemporaneous price of identical goods. But, we note, the concept of transaction value underwent a change through amendment of Rule 4 after the decision in Rajkumar Knitting Mills (supra). It was the amended rule which came to be examined by the apex Court in the cast of Eicher Tractors (supra). Admittedly, the present case also is governed by the amended rule. Hence the apex Court's ruling in Eicher Tractors (supra) must govern the instant case.
4. This Tribunal had occasion to distinguish Rajkumar Knitting Mills' case in the case of Andhra Sugars (supra). In that case, the goods were supplied to the importer at a price agreed between them and their supplier. The department had not alleged that anything in excess of the agreed price was paid or payable by the importer to their supplier under the contract, nor was it a case of the Revenue that the said' price was influenced by any consideration other than commercial. In such circumstances, it was held that there was no justification for rejecting the transaction value of the goods. What was rejected by the Tribunal in that case was the department's reliance on the price of certain goods imported contemporaneously, i.e., goods which came to India by the same vessel on the same date. No parallel was found between the case of Andhra Sugars (supra) and that of Rajkumar Knitting Mills (supra). The decision in Andhra Sugars (supra) was followed by the same Bench in the case of Agarwal Industries (supra), wherein the price of identical goods contemporaneously imported into India by the same vessel was ignored and the contracted price (transaction value) was accepted as the basis for determining the assessable value of the goods in question.
5. Learned SDR has relied on the Tribunal's decision in ABM International Ltd. v. Commissioner of Customs, Kandla 2002 (148) E.L.T. 704 (Tri. Del.), wherein the Supreme Court's ruling in Rajkumar Knitting Mills (supra) was followed for holding that the assessable value of the goods imported was to be determined with reference to the date of importation and not with reference to the date of contract entered into between the importer and the foreign supplier. It is noticed that the date of import in the case of ABM International (supra) is prior to amendment of the relevant Valuation Rule.
6. We have already held that there is no valid reason in this case to reject the declared value of the goods. The question now is what is the 'declared value'. What was declared in the Bill of Entry was USD 13.5 per kg. But, subsequently the assessee agreed to a marginal enhancement to USD 13.94 per kg. Thus the declared value stood modified as USD 13.94 per kg. on account of the assessee's voluntary acquiescence. It was this value (USD 13.94 per kg.) which has been accepted by the lower appellate authority as the basis of the assessable value of the goods. In view of the apex Court's ruling in Eicher Tractors (supra) and the Tribunal's decision in Andhra Sugars (supra) and Agarwal Industries (supra), we have to sustain the order of learned Commissioner (Appeals). In the result, the Revenue's appeal gets dismissed.
(Pronounced in open Court on 20-3-2006)