COMMISSIONER OF CUSTOMS (EXPORT) Vs. RADHEY SHYAM RATANLAL

JUDGEMENT

(1.) THE respondents Radhey Shyam Ratanlal had entered into a contract for import of one thousand tonnes of cloves of Indonesian origin at the rate of US 750 PMT CIF Mumbai for supply between July 1998 and February 1999. The importer however could import only 463.21 MT of cloves during the contract period which was assessed and cleared at the rate of US 750 PMT. Since the supplier was delaying the supply of balance quantity within the contract period, the importer pursued the matter through DGFT/ Embassy of India and thereafter the supplier shipped 63.46 MT cloves of Indonesian origin (during June 99 and 50.875 MT of cloves of Zanzibar origin during November 99 and the importer filed bill of entry claiming assessment at the contracted value of US 750 PMT. Since supplies were made beyond contracted period and there was an increasing trend of prices of these commodities in the international market, the department did not accept the declared value of US 750 PMT and sought to finalise the assessment at the rate of US 1800 PMT based on the price of contemporaneous imports. The assessments were finalized accordingly.

(2.) THE appellants filed an appeal against the same in CEGAT and the Tribunal vide its order dated 8 -7 -2000 remanded the case to the Adjudicating Authority for re -adjudication after issuing a proper show cause notice to the appellant and allowing them the opportunity to be heard and to examine the relevance of country of origin and commercial quantity level involved in the contemporaneous imports. Accordingly a show cause notice was issued on 31 -8 -2000 in respect of supplies made in the month of Nov. 99 and seeking as to why the value should not be enhanced, in respect of goods imported vide bill of entry No. 1230 and 1235 both dated 3 -12 -1999, to US 1800 PMT and differential duty recovered accordingly on the ground that the goods imported under these two bill of entries were that of Zanzibar origin whereas the contract was in respect of Indonesian origin and that the contract was limited only to supplies made till Feb. 1999 whereas the supplies in these two bill of entries were made during Nov. 99. The quantities involved in the subject two bills of entry were 29.6 MT and 21.275 MT respectively. The show cause notice was dropped by the Commissioner (Customs) holding that once the transaction value is available the correctness of which is not being doubted and since the import was in terms of contract which the supplier was forced to comply with by intervention of Government authorities like DGFT. Indian Embassy and the matter was in the knowledge of the Custom House itself, the same cannot be faulted with. It was further observed that in the absence of any evidence regarding any additional payments received by supplier, the transaction value cannot be rejected and therefore the question of going in to the value of contemporaneous import does not arise. The Commissioner also considered some of the prices of the contemporaneous import obtained from Directorate of Valuation and came to the conclusion that these prices cannot be considered as contemporaneous as there was vast difference between quantity imported. Therefore on this ground also it was held that the value cannot be enhanced and therefore the decided value of US 750 PMT has to be accepted.

(3.) LEARNED JDR however submits that the Commissioner's Order was erroneous as the Commissioner has not properly appreciated the judgments in Rajkumar Knitting Mills (P) Ltd. case reported in 1998 (98) E.L.T. 292 (S.C.) wherein the Hon'ble Supreme Court had interpreted Section 14 of the Customs Act, 1962 which he used as base to his conclusion. The definition of value under Section 14 and the Rules made there under create a conflict in so far as the Rules when considered in isolation take one to the contract value whereas the value under Section 14 takes one to the price at the time of place of importation which is well after the contract is signed. The Commissioner failed to appreciate that the valuation rules cannot supersede the force of Section 14 since the rules are creation of Section 14 and the Rules have been made to render the provisions of Section 14 operational and cannot be interpreted in a manner to make the provisions of Section 14 ineffective. This is because, Section 14(1A) provides "subject to provisions of Sub -section (1) ..". and those Rules are subject to scope of Section 14. Therefore the contract price in this case cannot be treated as valid, more so because the original period for delivery had already expired and the import took place well after the contract had expired and particularly quality much better than one contracted.