TMI Blog2005 (5) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... visional assessment a final assessment was required to be made and therefore, it should have been left to the assessing officer to make the final assessment orders u/s 18 in all these matters. Under Section 18 of the said Act, the proper officer is empowered to direct that the duty leviable on the subject goods may pending the production of the relevant documents or furnishing of information or completion of the test or enquiry be assessed provisionally if a security is furnished as deemed fit by the proper officer, for the deficiency, if any. Under sub-section (2) of Section 18 the duty leviable on the goods in question is required to be assessed finally in accordance with the provisions of the Act. In the present matters while setting aside the final assessment order, on the ground that the reduced price reflected the correct transaction value, the Commissioner has overlooked the aspect that the final assessment was required to be made by the assessing officer u/s 18(2) of the said Act. We, therefore, while dismissing all the appeals for the reasons mentioned above, direct that the assessing officer will now make the final assessment orders u/s 18(2) of the Act and in the light o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Crosseas Shipping Ltd., United Kingdom at the price US$ 2181365.64. This price was reduced by addendum dated 18-11-97 to US$ 2037807.00. The delivery of the vessel was taken on 5-12-97. The Bill of Entry for home consumption was filed by the respondent on the reduced price. The authorities, not, accepting the reasons, issued a show cause notice proposing to demand the differential duty which came to be confirmed at Rs. 7,56,723/-, by the adjudicating authority. Appeal No. C/319/99 - 5. Here also the respondent had imported an old vessel for breaking which was purchased by them from M/s. Canada Shipping Trading, Liberia for the price of US$ 1638457.96. The price was thereafter reduced by the addendum dated 15-12-97 to US$ 1325494.08 and the Bill of Entry was presented on that basis. The delivery of this vessel was taken on 17-12-97. The authorities issued a show cause notice demanding the differential duty not being satisfied by the reasons for reduction in price and the adjudicating authority confirmed the demand of differential duty of Rs. 33,33,838/-. Appeal No. C/320/99 - 6. The respondent filed Bill of Entry on 2-1-98 in respect of the vessel that arrived at Alang Anchorage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er relied on the decision of the Tribunal in Mineral Metals Trading Corporation of India reported in 1984 (15) E.L.T. 148, in which it was held by the Tribunal that the prices mentioned in the invoice in accordance with the amended contract which was obtained at the time when the goods were supplied, should be accepted, since the authorities had no power to question the validity or otherwise of the contract, if the two contracting parties are agreed to revise the contract on certain conditions and that the terms of the contract had to be meticulously applied when the price was rightly shown in the invoice. The Appellate Commissioner then proceeded to apply the ratio of the decisions of the Supreme Court in Union of India v. Jalyan Udyog reported in 1993 (68) E.L.T. 9 (S.C.) and Collector of Customs v. Salim Abbas Bhai reported in 1997 (94) E.L.T. 466 (S.C.) by holding that the date when the appellants beached their vessels for breaking up was to be considered as the date of importation and the value prevailing on the date of importation was the assessable value under Section 14(1) of the Customs Act, 1962 for levy of import duty. The learned Appellate Commissioner also held that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same. 11.1 Section 14 of the Customs Act which relates to valuation of the goods for the purposes of assessment provides in sub-section (1) that for the purposes of the Customs Tariff Act, 1975, or any other law for the time being in force whereunder duty of Customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. Under Section 14(1A), the price referred in sub-section (1) in respect of imported goods shall be determined in accordance with the rules made in this behalf. Under Rule 4(1) of the Customs Valuation Rules, 1988 it is provided that the 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 these Rules. Sub-rule (2) of Rule 4 provides that the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n where payment of price may be deferred. It is only when the transaction value under Rule 4 is rejected, then under Rule 3(ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 of the Rules. If the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules. 12. The change in the original price by addendum to the MOA in all these cases is, therefore, required to be viewed in the background of the above settled legal position that if the transaction value can be determined under Rule 4(1) of the said Rules and does not fall under any of the exceptions in Rule 4(2), there could arise no question of determining the value under the subsequent rules. 13. The Memorandum of Agreement in all these cases reflected the terms of the contract. The addendums by which the stipulation of the reduced price was substituted in the Memorandum of Agreement briefly recorded the reasons for such reduction. The reduction in price was done, as observed above, before the delivery was taken. The terms of the Memorandum of Agreement indicated in all these c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferred to the buyer, the goods are at the buyer s risk whether delivery has been made or not. They are also in consonance with Section 32 which provides that, unless otherwise agreed, delivery of the goods and payment of the price are concurrent conditions. Under Section 42 of the said Act, the buyer is deemed to have accepted the goods when he intimates to the seller that he has accepted them, or when the goods have been delivered to him and he does any act in relation to them which is inconsistent with the ownership of the seller, or when, after the lapse of a reasonable time, he retains the goods without intimating to the seller that he has rejected them. A buyer has a right to examine the goods under Section 40 where he has not previously examined them and he is not deemed to have accepted them unless and until he had a reasonable opportunity of examining them for the purpose of ascertaining whether they are in conformity with the contract. If a wrong quantity of goods is delivered and the buyer who had option to reject them, accepts the goods so delivered, he shall pay for them at the contract rate (Section 37). Therefore, in cases where the goods are not offered at the place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncies were noticed in the vessel which was described in the MOA. 15. The fact that the vessels were sold on as is where is basis did not preclude the parties from varying the price originally stipulated by mutual agreements. It appears that before the delivery was taken discrepancies and excess removals etc. were noticed and on negotiation the prices were reduced by mutual agreement, as reflected in the addendums executed by both the parties bringing about the alterations in the original contract while retaining all other terms and conditions thereof. It was before taking of the delivery that the buyers could have exercised their right to reject the goods if they were not as per the specifications stipulated in the memorandum of agreement. The as is where is basis clause did not preclude them from examining the vessel to find out whether they were really being delivered the ship on as is where is basis described in the MOA. The particulars which were given about the vessel in the MOA, were required to be verified notwithstanding clause as is where is clause and if discrepancies/removals were found in those particulars, their option to reject the goods was not taken away by such a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption notification read as follows :- As mentioned hereinabove, the Central Government had issued an exemption notification under Section 25 of the Act being Notification No. 262-Cus., dated October 11, 1958. The said notification was amended by Notification No. 163-Cus., dated October 16, 1965. As amended the exemption notification reads as follows :- Exemption to ocean going vessels other than vessels imported to be broken up : Ocean going vessels other than vessels imported to be broken up, are exempt from the payment of Customs duty leviable thereon : Provided that any such vessel subsequently broken up shall be chargeable with the duty which would be payable on her as if were then imported to be broken. [Emphasis added] 17.1 In the case before the Supreme Court the permission was sought by the Chairman of the Shipping Corporation of India from the Government of India to purchase two second hand ships for operating between India and the Gulf and other destinations as ocean going vessels (passenger ship). The permission was granted on June 1, 1968 when the two second hand ocean going vessels which were purchased arrived at Bombay Port on August 14, 1968. No import duty was levie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms duty chargeable in the case of two ships concerned in the Jalyan Udyog case was the date on which they were broken up. The Supreme Court, in Paragraph 20 of the judgment clarified in the interest of certainty and to obviate any avoidable controversy, that the date of breaking up contemplated by the said proviso should be deemed to be the date on which the permission for scrapping/breaking is accorded by the Director General of Shipping. 17.2 It is quite clear from the facts of the Jalyan Udyog (supra), that the decision of the Supreme Court was rendered in the context of the proviso to the exemption notification and therefore, its ratio has no application in the present case in which admittedly all the ships were old and imported for the purpose of breaking up and it is not as if any one of them was imported as an ocean-going vessel and thereafter a decision was taken to break/scrap it. The learned Appellate Commissioner has, therefore, misapplied the ratio of Jalyan Udyog and Salim Abbas Bhai (supra) to the facts of these cases. 18. The Appellate Commissioner while setting aside the impugned orders of assessment and allowing the appeals with consequential relief has overlooke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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