Customs, Excise and Gold Tribunal - Delhi
Mahavir Spinning Mills Ltd. vs Collector Of Customs on 1 January, 1992
Equivalent citations: 1992(61)ELT730(TRI-DEL)
ORDER S.V. Maruthi, Member (J)
1. The issue is whether the value of imported goods can be enhanced on the basis of proforma invoice. The appellants imported a consignment of 30 cases containing two for one twister valued at Rs. 20,68,362 CIF. They filed a bill of entry No. 2804/113 dtd. 12-3-1984, against their import licence No. 208/124 dtd. 30-8-1983. A show cause notice dtd. 4-5-1984 proposing to enhance the price from Rs. 20,68,362 to Rs. 23,29,000/- was issued. The proposal is based on the proforma invoice of the appellants. On receipt of reply to the show cause notice, the value was enhanced as proposed in the show cause notice. There was no penalty. Hence the appeal before us.
2. The Collector held relying on the indenting agent's letter dtd. 12-4-1984 stating that the price in the proforma invoice was offered, however, having regard to the special relationship between the supplier and the indenting agent reduced the price on the basis of negotiations. Therefore, the price negotiated being a special price is not relevant for determining the assessable value under Section 14. Holding as above, he enhanced the value on the basis of price mentioned in the proforma invoice.
3. The main contention of the appellants is that the price mentioned in the proforma invoice is not relevant for determining the assessable value. It is in the nature of quotations. Further in the absence of contemporary imports at higher value the price mentioned in the invoice should be accepted. The Department had not adduced any evidence of contemporary imports at higher value and clandestine remittance of foreign exchange. Therefore, it is contended that the invoice value should be accepted.
4. Shri Satish Kumar reiterated the order of the Collector and relied upon the judgment of the Supreme Court in Sharp Business v. C.C. -1990 (49) E.L.T. 640 (SC).
5. The question, therefore, is whether proforma invoice price could be taken as the basis for determining the assessable value. Under Section 14 it is the price at which the goods are ordinarily sold in the course of international trade where the buyer and the seller are not interested in the business of each other and the price is the sole consideration for sale that is relevant for determining the assessable value. The Department has not adduced any evidence of contemporary sales at higher prices. No evidence of clandestine remittance of foreign exchange. No evidence of mutality of interest between the seller and the buyer. In these circumstances there is no reason why the invoice price should not be accepted. The reasoning of the Collector is that the proforma invoice indicated higher price. The proforma invoice is in the nature of an offer and the Collector also gave a finding that it is in the nature of an offer and the appellants have been contending that they negotiated with the supplier and got the price reduced. The reasoning of the Collector is that the price was reduced because of the special relationship between the importer and the foreign supplier who looking into their long term interest agreed to supply the goods at a rate lower than the quotation/proforma invoice price, and therefore the invoice price is influenced by the special relationship. There is a fallacy in the reasoning of the Collector. Negotiations are a part of ordinary commercial dealings and on account of that it does not become extra-commercial consideration. Therefore, the order of the Collector cannot be substantiated in the absence of contemporary imports at higher prices. The judgment of the Supreme Court relied upon by Shri Satish Kumar is not relevant as in the said case the importers themselves relied upon a quotation in support of their price. We, therefore, allow the appeal and set aside the order of the Collector.