TMI Blog1995 (11) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... provisionally, awaiting filing of test/analysis report and documents viz. Bill of Lading, Invoice, Survey Report, Original Certificate of Country of Origin etc. Subsequently, the importer submitted the required documents and requested for finalisation of Bill of Entry. Accordingly, the Bill of Entry was finalised and the consequential refund of various amounts were paid under Voucher. Later, the department noticed that the service charges paid by the importers to M/s. Minerals and Metals Trading Corporation were not included, while arriving at the assessable value either at P.D. Stage or finalisation stage. Since, the Cargo (Phosphoric Acid Solution) is canalised through M/s. Minerals and Metals Trading Corporation from 1-4-1990, the department took the view that the service charges had to be taken into account while arriving at the assessable value. In the absence of actual service charges paid to the canalising agents, 5% of C F value was added towards service charge and an ad hoc demand notices were issued to the appellants. 5. In reply to the demand notice, the importers along with their reply enclosed a revised Invoice issued by M/s. MMTC, wherein they had charged at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import the goods without a specific licence or without violating ITC restrictions. Since in this case they never had the chance of being a direct importer, employing a buying agent to work on their behalf is out of question. Hence, he has held that the party s theory regarding buying commission cannot be accepted. He further held that in the case of a High-seas sale, the transaction is between the High-seas seller and High-seas buyer. The price negotiated for the purpose of High-seas sale/purchase, therefore, can only be the transaction value. Therefore, he concluded that the Invoice of the M/s. MMTC is only to be accepted for the purpose of valuation. The importer namely, M/s. Godavari Fertilizers and Chemicals Ltd. were aggrieved with the seven orders-in-original and hence they appealed before the Collector (Appeals), who has disposed of these appeals by a common order. In the impugned order the Collector has confirmed the findings of the Assistant Collector. The learned Collector has noted about the sale of the goods by MMTC to Godavari Fertilizers and Chemicals Ltd. on High-seas sale basis and M/s. Godavari Fertilizers and Chemicals Ltd. filing the Bill of Entry on account of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the same on the ground that all charges incurred by the high seas seller, whether they are in the nature of bank charges or service charges formed a part of the transaction value. He has also held that there is no conflict between Section 14(1) and the rate of exchange adopted by the Customs and has also held that the various items of cost in the invoice raised by M/s. MMTC are the expenditure incurred by M/s. MMTC and therefore, the same are collected from its buyer when the goods are sold in an international trade. Therefore, he has held that the sale between M/s. MMTC and M/s. Godavari Fertilizers are in the course of international trade. 6. The Learned Collector in the case of M/s. SAIL has also arrived at a similar conclusion. He has held that it has been established beyond doubt that the purchase order was placed by the canalising agency on the over-seas buyer on the basis of the requirement of M/s. SAIL, and as per their own admission, M/s. MMTC of India placed the orders on the foreign seller, on the basis of which M/s. SAIL the end user opened irrecoverable letter of credit in favour of the foreign seller. The foreign seller obtained the bill of lading and informed M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962 as charged in the show cause notice. While confirming the duty amount of Rs. 2,23,372.35, he has also imposed a personal penalty of Rs. 25,000/ under Section 112 of the Customs Act, 1962 in respect of order-in-original dated 8-3-1992. 7. In Order-in-original dated 21-4-1992, the Collector has confirmed the duty amount of Rs. 2,07,281.00 and has imposed a penalty of Rs. 20,000/. 8. In Order-in-original dated 21-3-1992, the Collector has confirmed the duty amount of Rs. 18,50,827/ and has imposed a penalty of Rs. 1,50,000/. 9. In Order-in-original dated 7-4-1993 signed on 25-5-1993, the Collector has confirmed the duty amount of Rs. 2,30,668.00 against the earlier confirmed duty of Rs. 2,07,281.00 confirmed vide the order-in-original dated 21-4-1992. 10. By order dated 7-4-1993, the Learned Collector has confirmed the duty amount of Rs. 27,40,107.00 against the earlier confirmed duty of Rs. 18,50,827.00 confirmed vide order-in-original No. 10/Collr/Cus./BBSR/91/3, dated 21-4-1992. The Learned Collector has noted that by his adjudication order dated 21-4-1992 issued on 7-5-1992 is corrected to that extent only and rest of the order dated 21-4-1992 issued on 7-5-1992 rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of C F value. This includes cover towards shortage over and above the half per cent of the Bill of Lading quantity and in case of any such shortage, the appellants will forward their claim duly supported by the surveyor s report to underwriters for lodging the claim under intimation to M/s. MMTC. Any liability arising out of not taking insurance cover in time by the appellants or other allottees from the same ship will be entirely the appellant s responsibility. A copy of open insurance policy obtained in advance shall be made available by the appellants to MMTC. The Learned Advocate also pointed out to the Annexure I of the contract which states that MMTC concludes purchase contracts for arrivals/ shipments in six months and gives unit wise allocations to the seller under intimation to : Department of Fertilizer Concerned User MMTC ROS. The clause 2 of the Annexure states that Units furnish/finalise specific shipment/loading schedule with seller and units and seller intimate M/s. MMTC, New Delhi of agreed schedule, who in turn inform concerned ROS. For any subsequent changes rescheduling - same to be followed. The Learned Advocate also pointed out to the clause 5 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es for concluding high seas sales. When sales takes place between the canalising agent and the actual user such sale cannot be considered as high seas sales. It is his submission that the international trade would contemplate trade involving two countries. An international trade is a term used in contra to the definition of intra-national trade. The price charged by the foreign supplier for sale to MMTC is certainly a price in the course of international trade. However, the price charged by MMTC for sale to the appellants is in the course of intra national trade and not in the course of international trade. On the other hand, it represents a price wholly alien to and directly contrary to the scheme of Section 14(1) and therefore, is irrelevant for the purposes of Section 14(1). The Learned Counsel submitted that instead of importing through the canalising agency if the appellants were to buy the goods directly from foreign supplier, the foreign supplier would be supplying the goods to the appellants at the same price at which it was sold to M/s. MMTC. Therefore, it is his submission that the price being charged by the foreign supplier to M/s. MMTC is not any special price but is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants to M/s. MMTC as a compensation for these charges and is, therefore, covered by expression buying commission . He submitted that the Interpretative Note specifically refers to for service of representing him abroad . It is, therefore, immaterial whether the services are being rendered by M/s. MMTC abroad or within the country. Therefore, he submitted that the department s theory that the expenses incurred by M/s. MMTC are in the nature of pre-importation charges is wholly irrelevant. 13. The Learned DR submitted that the goods were imported by M/s. MMTC and sold to the appellants on high seas basis. He submitted that the endorsement of Bill of Lading is not the criterion but the sale which has taken place on the high seas, and that has been the accepted concept of high seas sales. The sale between the M/s. MMTC and the appellants have to be considered as an international sale and, therefore, on that basis sales tax has also been exempted to the appellants. This has been the accepted concept for decades. The Learned DR submitted that the party itself is not clear in the arguments about the stands taken by them. He submitted that the canalising agent has sold to the local a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in 1986 (26) E.L.T. 962 and that of the ratio rendered in the case of M/s. Seshasayee Paper and Board Ltd. v. Collector of Central Excise as reported in 1988 (36) E.L.T. 611. 14. The Learned Advocate countering the arguments of the Learned DR submitted that endorsement on the Bill of Entry is made after the vessel enters the territorial waters of India and therefore, MMTC is required to be considered as the importer. He submitted that the filing of Bill of Entry is the matter of procedure and merely because the appellants had filed the Bill of Entry, it cannot be presumed that there has been a sale on high seas. He submitted that M/s. MMTC rate is the price to be considered and not the price at the time of importation. The post fluctuation price should not be taken into consideration for the purpose of valuation. He submitted that for the purpose of taking out an insurance policy the ownership of the goods is not the criterion. The Learned Advocate also relied on the judgment rendered in the case of M/s. Tata Iron and Steel Co. Ltd. v. Collector of Customs, as reported in 1993 (66) E.L.T. 622 (Trib.) = 1992 (41) ECR. 282. As regards M/s. SAIL, the Learned Advocate submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. On a careful consideration of the plea, we notice that the Bill of Entry has been presented in this case by the importers and not by M/s. MMTC of India Ltd. We note one Bill of Entry No. 150, dated 18-5-1990 presented by M/s. Godavari Fertilizers Chemicals Ltd. which shows an endorsement 5,000 MT of Phos. Acid solution has been sold to M/s. Godavari Fertilizers and Chemicals Ltd. on High Seas Basis . The Assistant Manager (Shipping) of M/s. Godavari Fertilizers and Chemicals Ltd. has signed the declaration. It is noticed that the invoice to M/s. MMTC of India Ltd. has been raised by M/s. Maroc-phosphore and this invoice clearly indicates that the sale has taken placed directly M/s. MMTC, who have made the payment through Bank towards the sale price. The invoice also shows the endorsement contract NR : MMTC/FERT/005/PHOSACIO/9O Each of the invoice gives the date of contract etc. Therefore, from the reading of the invoice of the seller to M/s. MMTC of India Ltd. it is very clear that the sale of the product has been directly to M/s. MMTC of India Ltd. on the basis of payment made by them by bank transfer. M/s. MMTC of India Ltd. have inturn invoiced to the appellants and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he term buying commission , and it states that the term buying commission means fees paid by an importer to his agent for the service of representing him abroad in the purchase of the goods being valued . The facts in these cases clearly discloses that M/s. MMTC of India Ltd. has not represented the appellants as an agent and that no buying commission has been paid to them and the same is not reflected in any of the correspondents between them. The appellants have not placed any evidence to show that they had appointed M/s. MMTC as their agent and they have paid buying commission and not service charges. 18. It is further seen on scrutiny of the contract dated 20-4-1990 entered into by the appellants with M/s. MMTC of India Ltd. that the subject of the contract has been recorded as high-seas sale of Phos Acid per vessel GAFSA . The contract begins with the words this is to offer you Phosporic Acid per above noted vessel on the following terms and conditions of sale . On perusal of the entire terms of the contract, it is clear that this is a mere agreement of sale, which has been negotiated by M/s. MMTC after they purchased the impugned goods, with the foreign buyer. The con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn by M/s. MMTC to M/s. SAIL. 21. The show cause notice in Appeal No. C/1718/92-A, dated 8-4-1991 has also been issued by the Collector of Central Excise and Customs on a similar lines with the same allegations. 22. In Appeal No. C/2185/92-A, the show cause notice dated 4-4-1991 issued by the Collector of Central Excise and Customs on the same set of facts. 23. In Appeal No. C/776/93-A, the show cause notice dated 4-9-1992 issued under Section 28(1)(b) of the Customs Act, 1962 and this show cause notice states that there has been a mistake/error in calculation of assessable value and the differential duty vide show cause notice C.No.VIII(10)11/Cus/BBSR/91/10849-A dated 4-4-1991 and the order-inoriginal dated 21-4-1992 endorsed on 21-5-1992 and rectify the calculation error in differential duty. There is no infirmity in the impugned order as arising from this show cause notice. 24. In Appeal No. C/797/93-A, the show cause notice dated 4-9-1992 issued by the Collector of Central Excise and Customs, Bhubaneswar states that there has been a mistake/error in calculation of assessable value and the differential duty vide show cause notice dated 8-4-1991 and the order-inorigina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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