INDIAN ACRYLICS LTD. Vs. COMMISSIONER OF CUSTOMS,

JUDGEMENT

(1.) THE brief facts of the case are that the appellants herein are engaged in the manufacture of acrylic fibre since 1992. For the purpose of manufacture of the goods, they imported acrylonitrile from M/s,Mitsubishi Corporation of Japan. Under Bill of Entry dated 20.3.98, they imported 2024 MTs of acrylonitrile under invoice dated 3.3.98 declaring the value as US 500 PMT CIF. On scrutinising the documents for assessment, it was found that the goods were supplied against purchase order dated 29.1.98 and that during the period of contract as per PLAT Publication, the CIF price of the goods ranged between US 580 TO 610 PMT CIF. It is also found that one more consignment of acrylonitrile had been imported by M/s.Pasupati Acrylon Ltd. from the same supplier wherein the value was declared as US 550 PMT. From the above, it appeared that correct price prevailing during the period of shipment ranged between US and 550 to 570 and that the appellants' invoice declaring the value as US 500 PMT did not reflect the correct transaction value. Hence a show cause notice dated 17.4.98 was issued to the importer proposing enhancement of the value to US 550 on application of Rule 5 of the Customs Valuation Rules 1988. The Assistant Commissioner enhanced the value as proposed; his order was upheld by the Commissioner (Appals); hence this appeal.

(2.) WE have carefully considered the rival submissions. It is not the case of the Department that the transaction between the appellant and its supplier was not on principal to principal basis or that the appellant and the supplier are related persons within the meaning of Sub -rule(2) of Rule 2 of the Customs Valuation Rules 1988. The appellants had entered into a long term agreement with M/s.Mitsubishi Corporation in terms of which the price is required to be negotiated and determined on each shipment 30 days in advance of the commencement of each shipment month.Under the agreement, the appellant was to lift a quantity of 15,000 MTs acrylonitrile per year and the minimum quantity per shipment was 2000 MTs plus minus 5% and the seller had the obligation to make a firm offer of 3000 -4000 MTs per quarter. The price charged to the appellants arises out a contract after due negotiation. Therefore, that price is the price to be accepted in the light of the decision in the case of Basant Industries reported in 1996 (81) ELT 195 and Mirah Exports P. Ltd. reported in 1998 (98) ELT 3 SC. We note that the import by M/s.Pasupati Acrylics Ltd. is not on the same commercial level as that of the appellants. Hence the decision in the case of Rajkumar Knitting Mills reported in 1998 (98) ELT 292 SC which has been relied upon by the Commissioner (Appeals) is not applicable to the present case. The appellants' plea that the lower price offered to them was quantity discount is borne out by the terms of the long term agreement itself.It has been held by the Tribunal in the case of D.K. Exports vs. Commissioner of Customs, Calcutta reported in 1997 (92) ELT 281 and G.S.A.(India) vs. Collector of Customs, Bombay reported in 1998 (103) ELT 541 that the difference in quantity makes a difference,and that the quantity discount for bulk buyer is acceptable.We, therefore, hold that the declared value of US 500 PMT is required to be accepted and set aside the enhancement of value to US 550 PMT. In the result, we set aside impugned order and allow the appeal.