COMMISSIONER OF CUSTOMS Vs. PUSHPANJALI SILKS PVT. LTD.

JUDGEMENT

(1.) THE respondents had imported 9095 kgs. of what was declared as "mulberry raw silk (3A) and (4A) grade of Chinese origin" and filed a Bill of Entry dated 15 -9 -2005 for its clearance, declaring its unit price as USD 13.5 per kg. The goods were examined and samples thereof tested, whereupon it was confirmed that the goods were of the same grade as declared by the importer. However, the above declared price, which was based on a contract dated 17 -2 -2005 between the importer and the foreign supplier, was proposed to be rejected by the department having regard to higher contemporaneous price available for identical goods from the same country of origin. The essential particulars of the 'contemporaneous" imports were furnished to the assessee and the same are as under: -

(2.) WE have given careful consideration to the submissions. It appears from the records that the assessee was given an opportunity to produce the manufacturer's invoice or other documentary evidence in support of the declared price of the subject goods but could not furnish any such evidence. Apparently, in such circumstance, the original authority, under Rule 10A of the Valuation Rules, took the view that assessable value of the goods could not be determined under Sub -rule (1) of Rule 4. The authority, therefore, rejected the declared price under Rule 8 of the Valuation Rules. But the residual method provided under Rule 8 could be resorted to only where the assessable value of the goods could not be determined under any of the preceding rules including Rule 5 whereunder transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued could be adopted as the assessable value of the latter goods. By adopting unit price of USD 22.36 per kg. of identical goods cleared under two Bills of Entiy dated 18 -8 -2005, as the assessable value per unit quantity of the subject goods, the original authority was invoking Rule 5 of the Valuation Rules. It was not open to that authority to invoke Rules 8 and 5 at the same time inasmuch as Rule 8 was applicable only when the assessable value could not be determined under the provisions of any of the preceding rules including Rule 5. Thus, obviously, the decision taken by the original authority was fraught with dichotomy. Coming to the order passed by learned Commissioner (Appeals), we find that the assessable value was determined in the light of the apex Court's ruling in Eicher Tractors (supra). Eicher Tractors Ltd., manufacturers of tractors and tractor engines in India, used to import bearings for their tractors and tractor engines from a Japanese company since 1955. In 1988, they started procuring such bearings by local purchase from M/s. HMT Ltd. The Japanese vendor had a stock of bearings, which was expected to be lifted by Eicher Tractors Ltd. That stock was offered to Eicher Tractors Ltd. at concessional price of Japanese Yen 826 per piece and the same was accepted by the company, which accordingly placed an order on the Japanese vendor on 17 -4 -1993. Eicher Tractors Ltd., filed Bill of Entry dated 3 -12 -1993 [accompanied by Invoice dated 6 -10 -1993] with the Customs authorities for clearance of the goods. The original authority, upon finding that the declared price was lower than the one mentioned in the vendor's price list, refused to accept it as normal price under Rule 4 of the Customs (Valuation) Rules read with Section 14 of the Customs Act. It enhanced the price of the bearings to Japanese Yen 2507 per piece under Rule 8 on the basis of the vendor's price list coupled with permissible discounts. The appeal preferred against the Assistant Collector's decision was allowed by the Collector (Appeals). But, in course of time, the order of the appellate authority came to be set aside by this Tribunal in an appeal filed by the Department. This was the circumstance in which the apex Court happened to deal with the dispute in a civil appeal filed by the assessee. Their lordships noted that: (i) the department had not alleged that the assessee had misdeclared the price actually paid, (ii) the assessee had not misdescribed the goods; and (iii) the department had no case that the particular import fell within any of the situations enumerated under Rule 4(2) of the Valuation Rules. It was also noticed that no reason had been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of the vendor. The Hon'ble Court proceeded to hold that the price list was no more than a general quotation, which did not preclude discount on the listed prices. When a discount was permissible commercially, the same would have been offered to anyone wishing to buy the old stock. As a matter of fact, discounts upto 30% were allowable as per the contract between the Japanese company and their Indian agent. In the circumstances, it was held that there was no reason why the declared value was not acceptable under Rule 4(1). We are of the considered view that the apex Court's ruling was rightly followed by learned Commissioner (Appeals) in the present case. The subject goods were imported in terms of a contract indicating USD 13.50 as the unit price agreed between the contracting parties the import was made within the contracted period. The department has that any amount over and above the contracted price was paid by the importer to the supplier, nor is it their case that the 'importer was "related" to the supplier or that the price paid was influenced by any extra -commercial considerations. In the circumstance, there is no valid reason to reject the transaction value of the goods under Rule 4(1) read with Section 14. This is particularly so, as the appellant has not established that any of the special circumstances particularised under Rule 4(2) existed in this case.

(3.) LEARNED SDR has heavily relied on the Supreme Court's judgment in Rajkumar Knitting Mills' case (supra), wherein it had been held that the assessable value of the imported goods had to be determined on the basis of the price as on the date of importation and not on the basis of the price as on the date of contract. Apparently, this ruling permitted the assessing authority to make enquiry in the international market to find out contemporaneous price of identical goods. But, we note, the concept of transaction value underwent a change through amendment of Rule 4 after the decision in Rajkumar Knitting Mills (supra). It was the amended rule which came to be examined by the apex Court in the cast of Eicher Tractors (supra). Admittedly, the present case also is governed by the amended rule. Hence the apex Court's ruling in Eicher Tractors (supra) must govern the instant case.