Commissioner Of Customs (Import), ... vs Alfa Textiles

(Arising out of Order-in-Appeal No. 87/2004 (JNCH) dated 5.8.2004 passed by the Commissioner of Customs (Appeals), JNCH, Mumbai-II )

For approval and signature: Honble Mr. P.S.Pruthi, Member (Technical)

Honble Mr. Ramesh Nair, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Commissioner of Customs (Import), Nhava Sheva : Appellant

VS

Alfa Textiles : Respondent

Appearance

Shri D.K. Sinha, Assistant Commissioner (A.R.) for Appellant

Shri K.D. Chugh, Karta for respondent

CORAM:

Mr. P.S.Pruthi, Member (Technical) Mr. Ramesh Nair, Member (Judicial)

Date of hearing : 27/08/2015 Date of decision : 27/08/2015

ORDER NO.

Per : P.S. Pruthi

This appeal is filed by Revenue against the Order-in-Appeal dt.5.8.2004 passed by the Commissioner (Appeals) Mumbai-II.

2. The facts are that the respondent imported Furnace Oil from a trader in Dubai declaring the CIF value of US$120PMT. The department assessed the goods provisionally under Section 18(1) of the Customs Act to US$ 165 PMT on the basis of Platt prices. The adjudicating authority finalized the prices at US$ 165 under Rule 5 of Customs Valuation Rules after rejecting transaction value under Section 14 of the Act. Commissioner (Appeals) however found contemporaneous imports at values comparable to declared value of impugned goods and set aside the Order-in-Original. Revenue is in appeal against the order of Commissioner (Appeals).

3. The main grounds of appeal are that the value of identical and similar goods of Dubai Origin were not noticed and the price was correctly determined on the basis of internationally published prices. Revenue relies upon Dynast Industries Vs. Collector of Customs (P) 1999 (113) ELT 524 (Tribunal) and Honble High Court of Gujarat judgment in the case of Ramchandra Art Silk Yarn Vs. Union of India 2002 (139) ELT 540 (Guj.) to support the view that the assessable value can be determined on prices of published Journals.

4. We have carefully considered the facts and submissions of both sides.

4.1. Shri K.D. Chugh, Karta of respondent stated that their letter dt. 17.7.2000 confirming acceptance of terms of supply by the supplier is a contract for supply before establishing the L/C. We agree with this contention and do not agree with the adjudicating authority that a separate contract should have been produced. Mutual consent by way of invoice itself is a contract. The contract value is also established in the L/C. Without any evidence of additional flow back from the buyer to the supplier, it cannot be said that the invoice price is not a contract price. We also find that initially the contract was for 3000 Tons at US$ 131PMT but later the quantity was revised to 4000 MTs at the concessional rate of US$ 120PMT. We find that it is a commercial practice of reducing prices with increasing volumes. Therefore the amended price may be accepted as long as it is a genuine transaction price as per law.

5. Revenue has placed reliance on judgments which support determination of value on basis of international journals. In our view The judgments have been read out of context. The law for arriving at the correct assessable value is very clear. The Customs Valuation Rule 3 requires that value of imported goods shall be transaction value subject to Rule 12 (earlier Rule 9). Rule 3(2) states that the transaction value shall be accepted subject to conditions in the proviso to Rule 3(2) (earlier Rule 4(2)). We find none of these conditions posed a restriction in the present case. Even if there was a doubt in terms of Rule 12, the Rule requires that the authority must be proceed sequentially through Rule 4 to 9. Rule 4 requires the transaction value to be based on value of identical goods sold for export to India. The adjudicating authority based its decision on identical goods sold by the importer on high sea sale basis at US$ 165 PMT which is equal to the Platt price. We find that the contract between the supplier and importer was agreed upon in July 2000 whereas the said high sea sale took place much later. The adjudicating authority did not consider this fact. At the same time, the Commissioner (Appeals) has clearly stated that on further inquiry in the Custom House, the contemporaneous imports in the months of July, August and October 2000 were found to be US$ 140, 125 & 115 PMT respectively. It is not established by the department in the grounds of appeal that such contemporaneous imports did not take place. In these circumstances, it is incorrect on the part of the adjudicating authority to ignore the actual contemporaneous prices in terms of Rule 4 (earlier Rule 5). The department has not been able to either establish existence of any circumstances as in Rule 3(2) [(earlier Rule 4(2)] nor did it consider the correct contemporaneous imports. Reliance on judgments must be made in a proper context and not out of context. The judgments cited by Revenue do not say that when contemporaneous import prices are available, the same should be rejected and journal prices accepted. In this view of the matter, the grounds of appeal have no basis and are accordingly rejected.

6. Appeal rejected.

(Pronounced in court)

(Ramesh Nair) Member (Judicial)

(P.S.Pruthi) Member (Technical)

SM.

5 Appeal No.C/1040/2004-Mum