PREMNATH DIESELS PVT. LTD Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) APPELLANT , M/s. Premnath Diesels Private Ltd. is acting as Distributor for M/s. Detroit Diesel Overseas Distribution Corporation, USA, M/s. Allison Transmission Division of M/s. General Motor Overseas Distribution Corporation, USA, M/s. Delco -Remy/A.C. Division of M/s. General Motors Overseas Distribution Corporation, USA and M/s. Twin Disc Inc. USA. Appellant gets goods imported from those companies and stock them for retail sales to actual users. Over and above this activity they act as Indenting Agent of the goods manufactured by the abovesaid companies for third parties. In case goods are imported by third party, invoice is raised by the foreign principals adding commission. Commission so collected by the principals are passed on to the appellant by credit note. In certain transactions the principals realises distributors price from the actual users and direct them to pay the appellant commission in local currency. Commission so received by the appellant works out to be at the 6% of the invoiced amount shown in the sales to third parties. Coming to know of this type of transaction, Customs authorities proceeded to load the invoice value by 6.3% in terms of Rule 4 read with Rule 9(l)(i) of the Customs Valuation Rules, 1988. Appellant challenged the action of the adjudicating authority in appeal without success. They then moved this Tribunal by filing appeal C/1727/92. By Final Order No. 405/94 dated 21 -12 -1994 this Tribunal dismissed the appeal. Appellants took up the matter before the Supreme Court in Civil Appeal No. 3528/95. Their Lordships of the Supreme Court set aside the order of this Tribunal and remitted the case for fresh disposal.

(2.) WE heard the Learned Counsel representing the appellant and the learned Departmental Representative. We perused the records.

(3.) MAIN ground on which transaction value shown in the invoice, issued to the appellant, was rejected was that the appellant and foreign companies are related persons. It was also taken that the price at which goods were sold to the appellant was a special price and not the normal price in the course of international trade. Price of the goods shown in the invoices, namely, transaction value can be discarded when it is shown that the seller and the buyer have mutuality of interest in their business. Transaction value can also be rejected when it is shown that over and above that price something else flowed from the buyer to the seller. In the case on hand, there is no material to show mutuality of interest between the appellant and their foreign sellers. Revenue has not succeeded in showing that over and above the price shown in the invoices anything else flowed from the appellant to the foreign manufacturers. Appellant was a dealer of goods for foreign manufacturers. As dealer appellant was getting goods at a lesser price. Appellant also acted as Indenting Agent for actual users in India. When they get the goods imported, the foreign seller realises a higher value. Out of that, commission is paid to the dealer. Payment of commission by foreign manufacturer to dealer in India cannot be treated as a flow back from the buyer to the seller. Payment of commission is by the seller to his dealer. Under no circumstance, commission paid by manufacturer to the dealer can be loaded to the invoice value of the goods purchased by dealer from the manufacturers. In the decision reported in Basant Industries v. Additional Collector of Customs, Bombay - 1996 (81) E.L.T. 195 (SC), Their Lordships of the Supreme Court observed that stray instance of import at higher value is not to be adopted for the purpose of assessment totally ignoring all other attending circumstances. Appellant being a dealer of the foreign supplier was getting goods at a lower price. Departmental authorities have not shown any valid circumstance to ignore that value for purposes of assessment. Departmental authorities, for arriving at the assessable value, should have ascertained the transaction value in terms of the provisions of Section 14(1) of the Customs Act. If it is not possible to arrive at the transaction value, then the method shown in the Valuation Rules should have been resorted to. Rule 4 of the Valuation Rules provides that the transaction value of imported goods shall be the price actually paid or payable for the goods when sold. That Rule also states that the transaction value should be accepted. When transaction value is available, the price actually paid or payable is available. That value should be accepted unless it is found to be not genuine. In the instant case, there is nothing on record to show that the transaction value shown in the invoices was not the actual value but there was some flow back from the buyer to the seller. Revenue has not succeeded in showing any such flow back. What was attempted to by the Department in this case was that the seller paid commission to the appellant in relation to the goods sold by them to third parties. The said payment of commission by foreign seller to the appellant herein in respect of other transactions with strangers will not, in any way, make the transaction between them not genuine.