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Issues: Assessable value under Section 14 of the Customs Act, 1962 for goods supplied under two contracts on the same date with the same buyer and seller but at different prices.
In this judgment by the Appellate Tribunal CEGAT NEW DELHI, the appellants entered into two contracts with their foreign supplier for the supply of tungsten ore on the same date. One contract was for 60 M.T. at a fixed price, while the other was for 150 M.T. at a price based on the average of the High London Bulletin Tungsten Ore quotation plus a premium. The Department assessed the first quantity at the higher price, contending that assessable value could not differ for goods under two contracts with the same parties. The appellants argued that the international price of tungsten ore was rising, leading to the split pricing strategy in line with market conditions and trade practices. The appellants provided evidence from the "Metal Bulletin" to support their claim. The Department's representative maintained that different assessable values for the same goods contracted on the same date were unusual. However, the Tribunal found merit in the appellants' argument, noting that in a rising market, suppliers would avoid fixed prices for large quantities of scarce commodities. The Tribunal observed that the Department failed to provide evidence of different prices paid by other importers or any doubts about the transaction's genuineness. Consequently, the Tribunal held that the Department was unjustified in escalating the price for the smaller lot and allowed both appeals in favor of the appellants, granting consequential relief. This judgment primarily deals with the interpretation of Section 14 of the Customs Act, 1962 concerning the assessable value of goods imported under two contracts with the same buyer and seller but at different prices. The key issue was whether the Department's decision to assess the first quantity at a higher price due to both contracts being entered on the same date was valid. The Tribunal analyzed the market conditions for tungsten ore, the split pricing strategy adopted by the appellants, and the lack of evidence from the Department regarding pricing practices of other importers or doubts about the transaction's authenticity. The Tribunal's decision focused on the justification of the Department's actions in light of international trade practices and market dynamics, ultimately ruling in favor of the appellants. The judgment also highlighted the importance of market conditions and international trade practices in determining assessable values under the Customs Act. The Tribunal emphasized that in a rising market for scarce commodities, it is common for suppliers to adopt split pricing strategies to mitigate risks associated with fixed prices. The Tribunal scrutinized the evidence presented by both parties, particularly the "Metal Bulletin" publication and the absence of contradictory pricing information from the Department. By considering these factors, the Tribunal concluded that the Department's decision to escalate the price for the smaller lot was unjustified, as it did not align with prevailing market practices and lacked substantive evidence to support the assessment.
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