COMMISSIONER OF CUSTOMS Vs. HINDUSTAN ZINC LTD.

JUDGEMENT

(1.) HEARD both sides. The respondents M/s Hindustan Zinc Ltd. imported Lead Concentrate from M/s Glencore International AG, Zug, Switzerland. There is a contract between the importer and the seller, which specifies either minimum or maximum percentages of 25 elements in the lead concentrate. The contract also specifies that the price payable shall be for Lead and Silver metal contents as detailed below after deduction of treatment charge and agreed penalties: Lead: 95% of the actual lead content in the concentrate (minimum deduction 3 units per DMT) payable at LME cash settlement price for each market day averaged for Lead as published in the "Metal Bulletin", London for the quotational period. Silver (if any): 95% of the actual silver content in the concentrate (minimum deduction 30 grams per DMT) payable at London Spot (in US Dollars) quotations averaged for the quotational period.

(2.) WE find that the rationale for the terms of the contract has been explained by the appellants in a letter dated 23.7.99 to the original authority in the following terms: We have to submit that in terms of contract entered between us with M/s Glencore International, the price for the Lead Concentrate shall be based upon the price prevailing during the month after month of the arrival of the goods. In the instant case the goods were arrived at Kandla in January, 1998 and therefore in terms of contract, the LME price prevailing in the month of February, 1998 was reflected in the final invoice. It is a international trade practice and based upon the time taken for processing the metal concentrate into metal It is further submitted that the purchase contract is for lead metal in the lead concentrate, which can only be ascertained after processing of the concentrate into metal. The provisions made in the contract for valuing of the gods on the basis of price prevalent in the month after month of the arrival of Lead Concentrate which is the raw material for recovery of lead metal is dictated by technical necessities. This view is also further confirmed by the insertion of the proviso providing for deduction of treatment charge under clause No. 8 of the contract. We therefore request that the contract price should only be consideration for arriving at the assessable value and determination of duty amount eligible for refund.

(3.) IN the present case, there are two consignments one of Spanish and the other one of Polish origin, the price for the Spanish origin was provisionally fixed taking the lead price from the Metal Bulletin at 548 US and the price of Polish origin was taken as 540 US. In the first case, the lead percentage was 72% and in the second it was 73.73%. The final invoice has been worked out taking percentage of lead as 72.326% in the first case and 74.018% in the second case. However, the final price has been calculated on the basis of lead price @ 516.38 US as per the terms of the contract which specifies that the price is to be adopted for the quotational period, which is specified in the contract as the month after the month of arrival of the imported cargo at the discharge Port. Though the lead percentage is slightly higher in the final invoice, on account of the lower price adopted for the quotational period as reflected in the Metal Bulletin for the subsequent month after the month of discharge, the final price has become lower, leading to the refund claim by the respondents. The refund amount has also partly arisen on account of a rebate allowed as despatch money for quicker discharge of the cargo.