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L.....I.........T.......T.......T.......T.......T.......T..J J U D G M E N T RUMA PAL, J.

M/s Eicher Tractors Ltd., the appellant before us, manufacturers tractors and tractor engines in India. From 1955 the appellant imported bearings of a specific size for their tractors and tractor engines from M/s NTN Corporation, Osaka, Japan. This 33 year relationship was snapped in 1988 when the appellant started utilizing bearings manufactured for them in India by M/s HMT Ltd. The Japanese vendor was left with a stock of the bearings which had been manufactured by it for the appellant anticipating the appellants continued custom. Not finding any customer for the bearings, by letter dated 12th February 1993 the vendors agent in India offered to sell the 1989 stock of 3579 bearings to the appellant at a price of Japanese Yen (JY) 826 per piece. The appellant found the offer competitive and agreed to buy the bearings from the vendor at the price offered. An order was placed by the appellant on the vendor on 17th April 1993. The bearings were shipped from Japan and arrived in India. The appellant filed the Bill of Entry on 3rd December 1993 together with the invoice dated 6th October, 1993 with the Custom authorities. The Assistant Commissioner of Customs was not satisfied that the value of the bearings as declared by the appellant was the value of the bearings for the purposes of levying customs duty. He issued a notice on 14th December 1993 to the appellant. The appellant gave a detailed reply setting out the facts noted earlier. The Assistant Commissioner noted that the declared price was only 23% of the vendors list price and was of the view that the 77 per cent discount allowed to the appellant by the vendor was not normal and could not be accepted for the purpose of determining the price of the bearings under Section 14 of the Customs Act, 1962 and Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (referred to briefly as the Rules). The Assistant Commissioner determined the price of the bearings at JY 2507 per piece under Rule 8. In arriving at this figure, the Assistant Commissioner took the list price of the vendor and deducted 30 per cent on account of discount, which, according to the terms of agency between the vendor and its Indian agent, was the maximum permissible discount allowable. The appellant preferred an appeal before the Commissioner of Customs (Appeals), Mumbai. The Commissioner allowed the appeal. The respondent preferred an appeal before the Customs, Excise and Gold (Control) Appellate Tribunal. The Tribunal allowed the appeal by its order dated 23rd September 1998. The Tribunal accepted the reasoning of the Assistant Commissioner and relied upon the decision of this Court in Padia Sales Corporation V. CC 1993 Supp(4) SCC 57 to hold that specially quoted price was not acceptable in preference to the ordinary price in the course of international trade. According to the Tribunal, the ordinary price of the bearings in question was as mentioned in the vendors price list. The decision of the Tribunal has been assailed before us by the Appellant. According to the appellant, Rule 8 of the Rules, could not have been relied on by the Assistant Commissioner without determining the value of the bearings under Rule 4. It was submitted that giving of discounts was a normal incidence of commerce and given the circumstances of the case a discount of 77% was perfectly justified. Reference was made to the decision in Mirah Export Pvt. Ltd. V. Collector of Customs 1998 (98) ELT 3 where discounts ranging between 50% to 70% were found to be acceptable. According to the appellant, the reason given by the Assistant Collector for not accepting the actual price paid for the bearings as the true value of the transaction was erroneous particularly when there was no allegation of under-valuation. The respondent contended that the principle for valuation of imported goods was to be found in Section 14(1) of the Act which provides for the determination of the value on the basis of the international sale price. It is argued that the Rules would have to be read subject to Section 14(1) and that the use of the words price payable in Rule 4 meant the market value of the goods in international trade. While conceding that the onus was on the Customs authority to establish the market value of the imported goods, the respondent claimed that the onus had been discharged by proof of the vendors price list. In support of this argument, the respondent relied on Sharp Business Machines Pvt. Ltd., Bangalore V. Collector of Customs, Bangalore 1991 (1) SCC 154. Under the Act customs duty is chargeable on goods. According to Section 14 (1) of the Act, the assessment of duty is to be made on the value of the goods. The value may be fixed by the Central Government under Section 14(2). Where the value is not so fixed, the value has to be determined under Section 14(1). The value, according to Section 14(1), shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation in the course of international trade. The word ordinarily necessarily implies the exclusion of extraordinary or special circumstances. This is clarified by the last phrase in Section 14 which describes an ordinary sale as one where the seller or the buyer have no interest in the business of each other and the price is the sole consideration for the sale.. Subject to these three conditions laid down in Section 14(1) of time, place and absence of special circumstances, the price of imported goods is to be determined under S. 14(1A) in accordance with the rules framed in this behalf. The rules which have been framed are the Customs, Valuation (Determination of Price of Imported Goods) Rules, 1988. The rules came into force on 16th August, 1988. Under Rule 3(i) the value of imported goods shall be the transaction value. Transaction value has been defined in Rule 2(f) as meaning the value determined in accordance with Rule 4. Rule 4 (1) in turn states: The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules.