Judgment:
1. The point for determination in this peal is the correct value, for purposes of calculation of customs duty payable, of the goods imported by the appellants, viz. polystyrene resin High Impact Grade No. HR 60 against an indent dated 6-5-1989 and letter of credit dated 3-6-1989.
The appellants declared a value of US $ 1050 PMT CIF. Having noticed two other importations of somewhat similar goods at US $ 1200 PMT CIF (Polystyrene resin GP-125 and Polystyrene G-144) the Customs felt that the price of the goods was not correctly declared. It was also the feeling of the Customs that High impact polystyrene was generally costlier than the general purpose polystyrene in the normal international price. Therefore, as recorded in the Assistant Collector's order, the assessable value according to the Customs had to be determined under Rule 11 (presumably of the Customs Valuation Rules, 1988) read with Section 14(1) of the Customs Act, 1962. The reason for it recorded by the Assistant Collector was that the declared price by the importer was at variance with the evidence available with the Department.
2. Accordingly the Customs issued a show cause notice to the appellants and heard them in person. The Director of the appellants who appeared for personal hearing on 31-8-1989 stated that the declared price was the correct price and that their contract was of 6-5-1989. He also filed an invoice of an importer M/s. Gujarat State Export Corporation showing the price of US $ 990 for 500 MTS contracted on 7-6-1989 with letter of credit dated 8-6-1989 and also another invoice of M/s. Deluxe Sales Corporation showing the price of US $ 1050 PMT for high impact polystyrene HR 60 with letter of credit dated 5-6-1989. It is recorded by the Assistant Collector that in the personal hearing, Shri Madan, Director, stated that prices were falling in the international market.
Ultimately the Assistant Collector fixed the price at US $ 1200 PMT and the process by which he did so was as follows, in his own language : "As per Section 14(1)(A), rules are subject to Section. 14(1). As per Section. 2(41), value means as determined under Section 14(1).
Moreover as per Rule 11, whenever there is a dispute, the same has to be resolved as per Section 14(1). Because of the undisputed evidence shown by the department, the importers invoice price cannot be accepted. There can be no dispute that the Section 14(1) price at the relevant time (6-5-1989) is US $ 1200 PMT CIF. Hence I hold that the value should be enhanced to US $ 1200/- under Rule 11 read with Section 14(1) of Customs Act, 1962." 3. The Collector (Appeals) upheld the order noting that high impact Grade No. HR 60 is costlier than general purpose polystyrene resin GP 125 and G 144, those two varieties were being sold in India at US $ 1200 in the same week in which the appellants imported the goods and he was unable to accept that the same supplier would charge the two parties so differently or that it represents a normal business trend.
(The learned Advocate stated that the same supplier was not involved).
Hence this appeal.
4. We heard Shri D.N. Mehta, the learned Advocate. He argued that the Customs authorities wrongly rejected the transaction value comparing incomparables in that the goods whose value was compared with the value of the imported goods were of different grades, the time of import was different, the vessel which carried the goods was different and the supplier was different. He submitted that Customs ignored the evidence of an invoice by the same supplier, for the same goods and the same vessel, produced by the appellants. The learned Advocate submitted that Rule 11 of the Valuation Rules was not a method and argued that so long as the transaction is at arm's length, it is the value for purposes of assessment. Referring to Rule 5 and the note thereto, the learned Advocate argued that even if Rule 4 was found to be not applicable and Rule 5 and other Rules were applied in accordance with the sequence as a statutory requirement, the invoice value of the appellants would still have to be accepted as the price, even if lesser of the prices noticed during the period of 3 months in relation to the importation.
The learned Advocate further emphasised that in the first instance value has to be fixed Under Rule 4 of the Valuation Rules and only when this cannot be done can the Department go to other Rules. He submitted that application of Rule 11 by the Department was totally illegal.
5. Shri Prabhat Kumar, the learned DR very well assisted the Bench by attempting a detailed analysis of Section 14(1), Section 14(1)(A) and the Valuation Rules. He submitted that the basic requirement of Section 14(1) has to be satisfied and only then, through Section 14(1)(A) and in the background of Section 14(1), can the value be fixed under the Rules. In this legal position, the learned DR submitted, the action of the Customs in holding that the value declared did not satisfy Section 14(1) and, therefore, Rule 11 of the Valuation Rules has to be resorted to, was correct.
6. We have considered the submissions of both sides. We have carefully studied Section 14(1), Section 14(1) (A) and the Valuation Rules. We took particular note of the fact that Lucky Goldstar International Corporation (New Delhi Office) gave a "Certificate to Whom It may Concern" not only certifying the price but also saying that the price of the goods had come down in late August 1989 to till date at US $ 890 PMT. We also keep in mind the strong objection raised by the learned Advocate to the observation that high impact polystyrene is superior to general purpose polystyrene. Shri Mehta specifically denied that the Director of the appellants' company accepted before the Customs that HR 60 is always costlier than general purpose polystyrene. We asked Shri Prabhat Kumar to show the basis for such a view which was held by the Assistant Collector and the Collector (Appeals) (to the effect that high impact variety of polystyrene was costlier). No authority could be placed before us. Besides, the contents of Lucky Goldstar International Corporation dated 29-8-1989 indicated that not only the price was as stated by the appellants but subsequent to the importation the price decreased further.
7. We also note that neither of the authorities held that there was any remittance of foreign exchange abroad or that any relationship existed between the supplier and the importer. Above all we took note of Shri Mehta's submission that by the same vessel another importation took place (Gujarat State Export Corporation to whom both varieties of polystyrene were sold at US $ 990 PMT). We further note that the importation by Deluxe Sales Corporation which also took place on the same date was, according to the invoice, at US $ 1030 for general purpose polystyrene and US $ 1050 for high impact variety. Keeping these circumstances in mind we hold that the value should have been accepted as declared in terms of Section 14(1)(A) read with Rule 4 of the Valuation Rules. We hold accordingly and direct that the declaration value at US $ 1050 be accepted. We allow the appeal in these terms.