Full Judgment
British Steel Corpus, U.K. at higher value of 718 US $ per MT. The appellant sought to defend their lower transaction value for the purpose of assessment of the goods stating that the appellant was importing much higher quantity than the new buyer and that the appellant has negotiated transaction price which is liable to be accepted for assessment of the goods imported by them in terms of Section 14(1) of the Customs Act and Rule-4 of the Customs Valuation Rules. The Deputy Commissioner of Customs, ICD, Tughlakabad, New Delhi rejected the appellant's contention, noting that the importer had failed to submit the details of the negotiation and that the "prices agreed due to competitive global reduction in steel price "were not the prices in the ordinary course of international trade".
However, in view of the fact that M/s. Rasandik Engineering Industries India Ltd. imported 1000 MT of steel during 1999-2000, a lower quantity than the quantity ordered by Ms/ Mark Auto Industries Ltd., the Deputy Commissioner allowed discount at the rate of US $ 15 PMT of import above a quantity of 1000 MT. Accordingly, the Deputy Commissioner ordered the assessment of the goods including those already imported and waiting to be imported by the appellant in future, at the assessable values indicated in the Table to the Order. That Table and direction of the Deputy Commissioner are reproduced below:Period QTY (MTS) CIF US $ Loaded Value in USOct 1999 to Dec 600 585 7181999 Jan 2000 to March 400 858 7182000 April 2000 to June 500 570 7032000 July 2000 to Sept 500 570 7032000 Oct 2000 to Dec 500 555 6882000 Jan 2001 to March 500 555 688 It is incumbent upon te importer to follow the above assessment guidelines for identical goods imported at any other in India wherein the supplier is M/s British Steel UK." 3. M/s Mark Auto Industries Ltd. challenged this order before the Commissioner of Customs (Appeals). It was submitted that Deputy Commissioner could no have reopened the assessments already made under 20 Bills of Entry without issue of Show-case Notice as provided in Section 28 of the Customs Act. It was also pointed our that the Deputy Commissioner could not have fixed the future assessable value in advance for the goods yet to be imported. With regard to the 9 Bills of Entry relating imports during the period of the proceeding the appellant contended that those goods were eligible to be assessed to duty at the transaction value covering the transaction and not at the transaction value of another importer.
4. The Commissioner (Appeals) rejected their contentions and upheld the order passed by the Deputy Commissioner of Customs. The Commissioner held that reopening of the assessment in respect of goods already cleared had been correctly done inasmuch as the dispute about valuation had arisen on 28.4.2000 and the clearance of the goods under the 20 Bills of Entry had taken place during the period which was less than six months prior to 28.4.2000. The appellant's objection to enhancement of the value was also rejected on the ground that the valuation ordered by the Deputy Commr. was in conformity with the judgement of the Apex Court in the case of Rajkumar Knitting Mills Pvt. Ltd. vs. C.C., Bombay - 1998 (98) ELT 0292(SC).
5. In the present appeals also the appellant has raised the same contentions. During the hearing of the appeals, the learned Counsel for the appellant pointed out that any reopening of completed assessment under the Customs Act, has to be carried out in terms of Section 28 of that Act and that Section specifically provides for issue of Show-cause Notice within the time limit stipulated therein. The learned Counsel pointed out that since no such notice had been issued in relation to the goods which had been cleared under 20 Bills of Entry till April 2000, the Deputy Commissioner's order with regard to short-levy on those consignments has to be set aside on that ground alone. With regard to the goods not yet imported, the learned Counsel pointed out that advance determination of the value of those goods by the Deputy Commissioner was not contemplated in the Customs Act at all, and on that ground, that part of the order also was required to be set aside.
With regard to the goods covered by 9 Bills of Entry from April to May 2000, the learned Counsel argued that the declared values were the transaction values and they were required to be accepted in terms of Rule 4 of the Customs Valuation Rules 1988. Learned Counsel emphasised that the transaction between the appellant and M/s. British Steel Corpus was a purely commercial transaction and the prices agreed upon represented full consideration for the sale of the goods. Learned Counsel also pointed out that appellant had longer term import relations with the British Steel Corpus. and that along with the quantity contracted was the reason why appellant was able to negotiate a lower price than the price accepted by the new entrant, M/s. Rasandik Engineering Industries Ltd. Learned Counsel further emphasised that, though the contract was of 30th June 1999, the prices fixed under the contract were with regard to time of supply. Thus, the different prices were fixed for the different periods covered under the contract. He therefore, submitted that the contracted prices satisfied the requirement of price being at the time of importation under Section 14 of the Customs Act.
6. with regard to the case law relied upon by the Commissioner (Appeals) the learned Counsel pointed out that the judgement of the Apex Court in Rajkumar Knitting Mills (P) Ltd. was rendered with regard to the legal provisions under the Customs Valuation Rules 1963 and these Rules were superceded by the Customs Valuation Rules 1988.
Learned Counsel pointed out that under the Rules of 1998, which are relevant for considering the present dispute, the transaction value is to be accepted without regard to time standard i.e. irrespective of time the contract was concluded. Learned Counsel further pointed out that the appellant's case remains squarely covered by the decision of the Apex Court in the case of Eicher Tractors Ltd. v. C.C. - 2000 (122) ELT 321. It was pointed out that according to that judgement, the transaction value, i.e. the price paid or payable for the goods when sold for export to India can be rejected if and only if one of the four conditions in Rule 4(2) is attracted. Learned Counsel pointed out that it is not the case of Customs that any of these conditions are attracted. The only case of the Department is that another party has entered into another transaction for the same goods with the same supplier at a higher price. Learned Counsel pointed out that transaction is totally irrelevant to the valuation of appellant's imports. Learned Counsel also pointed out that the valuation of appellant's imports. Learned Counsel also pointed out that the appellant's case is also covered by the decision of the Apex Court in the case of Basant Industries v. Addl. Collector of Customs, Bombay.- 1996 (81) ELT 195 (SC). Learned Counsel pointed out that in that judgement, the Apex Court held that "a mere comparison of two invoices without anything more, may not be correct to proceed on the premise that there is under valuation. The relationship between the supplier and importer has also to be kept in mind because it is a matter of common knowledge that a price which is offered by a supplier to an old customer may be different from a price which the same supplier offers to a totally new customer".
7. Learned SDR pointed out that the impugned order has been passed following the decision of the Apex Court in the Apex Court in the case of Rajkumar Knitting Mills (P) Ltd. (supra). It was submitted that time is an important element for valuation of goods under Section 14 of the Customs Act. Price at the time of import has to be accepted for valuation and not the price contracted much in advance. Learned DR pointed out that on this issue, there is no difference with regard to legal provisions prevailing under the old rules and the present Customs Valuation Rules. She, therefore, contended that the impugned order s required to be sustained.
8. On a perusal of the records and the records and the relevant legal provisions, we find merit in the appellant's contentions that reopening of the past assessments under 20 Bills of Entry is clearly against the specific provisions of Section 28 of the Customs Act. That Section stipulates the procedure to be followed when nay duty has not been levied or has been short-levied etc. The requirement is that a Show-cause Notice should be issued to the parties within the period prescribed in that Section. The goods covered by the 20 Bills of Entry in question had been finally assessed and cleared. Therefore, those assessments could be reopened only in terms of Section 28. since this has not been done, the order is be held bad in regard to the consignments under the 20 Bills of Entry. There is no power conferred on the Deputy Commissioner for determining the assessable value of goods not yet imported. Therefore, the order is to be held bad with regard to the future import also. For future imports the assessable value can be determined in advance only be fixing a tariff value. That power is available with the Central Government.
9. With regard to the valuation of consignments covered by the 9 Bills of Entry in question, the ground taken for rejecting the transaction value is that identical goods had been imported by another importer from the same supplier at higher price. This can not a valid ground. It is inherent that transactions would be at different prices depending upon various factors affecting those transaction. Therefore, that goods had been imported at different prices by different importers would be no ground for rejecting some transaction values and for picking and choosing from among the transaction values to assess all the goods under import. Rule 4(1) states that transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of the Rules. Transaction value is also the value of the goods under assessment and not the transaction value of some other goods covered by some other transactions. The Apex Court has ruled in its judgement in the case of Eicher Tractors Ltd. (supra) that unless the value is vitiated by any of the reasons mentioned in the Rules themselves, the same is to be accepted. It has also been ruled that the discount granted by a vendor for variety of reasons including stock clearance would satisfy the requirement "for being the sale price" in the "ordinary course of sale". The Apex Court has also held as under in Basant Industries case "3. Ordinarily, this Court would not like to interfere in a matter of price fixation, but at the same time it seems necessary to impress upon the Department that by a mere comparison of two invoices without anything more, not be correct to proceed on the premise that there is undervaluation. The relationship between the supplier and importer has also to be kept in mind because it is a matter of common knowledge that a price which is offered by a supplier to an old customer may be different from a price which the same supplier offers to a totally new customer." 10. In the instant case, the appellant had tied up a long term supply contract. Prices were fixed depending upon the quantity and time of supply. The prices varied from US$ 585 PMT to 555 US$ PMT depending upon the time of supply. Such a price clearly satisfies the requirement of being normal price at the time of importation. The transaction value has not been questioned by the Customs Authorities on account of any deficiencies mentioned under the Customs Valuation Rules. That another person imported identical goods at higher price is no ground for discarding the transaction value. Such a course is also fraught with practical difficulties. As transaction values vary from customer to customer to customer and from seller to seller, different transaction values would be observed by the assessing authorities at any given time for the same goods. If they reject various transaction values in a search for the correct transaction value, there would be no satisfactory answer at all and assessment would be rendered well nigh impossible. In the present case, the appellant got certain reduced prices apparently because of quantity and time of supply. Also because he is an old regular buyer of the supplier. The Deputy Commissioner has ordered that in place of those discounted prices, prices fixed by him would be the basis for assessment. In doing so, Deputy Commissioner has allowed reduction of 15 US$ PMT after every purchase of 1000 MT. This is nothing more than his ipsi dixit. The discount to be allowed while valuing the goods for customs assessment is the discount given by the vendors for their commercial consideration and no the various discounts to be fixed by assessing authorities. In the facts of the present case, it is obvious that appellant had got a lower price than M/s. Rasandik Engineering Industries Ltd. on account of their long term imports and the quantity contracted for. As the Apex Court observed in Basant Industries case, the Customs Authorities should have realised "that relationship between supplier and importer has also be to kept in mind because it is a matter of common knowledge that a price which is offered by a supplier to an old customer may be different from a price which the same supplier offers to a totally new customer". The impugned order of assessment has come to be passed because the lower authorities overlooked this "common knowledge".
11. In view of what has been stated above, the appeals are allowed after setting aside the impugned orders. The goods shall be assessed at the transaction values and any amount paid in excess of the duty payable on the basis of the transaction values, shall be returned to the appellant forthwith.