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TMI Blog2020 (3) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding, the AO noted that as per ITS details the assessee purchased material of Rs. 3,88,54,935/- which was valued by the Custom Authorities at Rs. 3,92,99,838/- for levying Custom Duty. The AO further noted that the assessee debited purchases of Rs. 2,11,77,135/- on account of import. The AO asked the assessee to reconcile the difference inter alia the difference between the value of imported goods and payments made for purchases. In response, the assessee produced the ledger of import/purchases as well as the evidence regarding the payments for import of goods. The AO noted from the ledger of import that the assessee has debited a sum of Rs. 3,92,62,287/- against which various debit notes amounting to Rs. 1,80,85,152/- was claimed and balance amount of Rs. 2,11,77,135/- was debited in the profit and loss account. The AO found that the assessee has shown debit notes of Rs. 56,13,075/-, Rs. 56,40,345/- dated 11-11-2014 and Rs. 24,87,298/- dated 27-02-2015, total amounting to Rs. 1,37,40,718/- shown by the assessee on account of defective goods received from the supplier party from China. The assessee also produced the debit notes issued by him alongwith corresponding credit notes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld.AR of the assessee submitted that the Adhesive has a limited shelf life and thereafter it becomes useless on expiry of the date of shelf life and after that, the goods become nonsaleable, unusable and useless. Therefore, the material imported by the assessee is found to be defective due to expiry of the shelf life. Accordingly, the assessee issued debit notes to the supplier who has accepted the supply of defective goods and issued the corresponding credit notes as well as confirmations of the issuance of credit notes regarding the goods received by the assessee, being expiry date. The ld.AR of the assessee has referred to the E-Mail correspondence between the assessee and the supplier of goods and submitted that documents produced by the assessee establishes the facts that some of the goods imported by the assessee were found to be defective due to expiry date and therefore, the said fact cannot be rejected without any contrary material. The ld.AR of the assessee has also referred to DHL Courier details and receipts regarding confirmation of credit notes sent by the supplier. Thus the ld.AR of the assessee submitted that when the assessee produced all the relevant documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebit notes. The assessee explained that certain quantity of goods imported from M/s. ZHE JIANG JIUERJIU CHEMICALS CO. LTD. was found to be defective. The assessee produced the invoice/bills of these goods as well as the debit notes issued by the assessee to the supplier and corresponding credit notes issued by the supplier by accepting the fact that the goods as mentioned in the debit notes as well as in import bills were defective due to expiry of date. It is pertinent to note that the invoice regarding import of these goods and debit notes issued by the assessee give the details and description of the goods and particularly the Adhesive in question. We find that the invoice issued by the supplier gives the details of quantity of goods as well as the amount in USD whereas the assessee has given the details of the goods matching the same quantity and giving the reference of the invoice but the amount is converted into Rupees. The AO has not disputed the details as mentioned in the invoice and the debit notes issued by the assessee and corresponding credit notes issued by the supplier. The AO has questioned the correctness of the claim on the ground that no evidence was produced for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e corresponding sale of the goods is not possible. The details of the goods imported by the assessee which were found to be defective are as under:- Sl. Date Invoice No. Quantity and nature of goods Amount (USD) (i) 30.08.2014 INSH-141830 18000 Kgs Adhesive Glue 90300 (ii) 30.09.2014 INSH-141913 18000 Kgs Adhesive Glue 90000 (iii) 29.11.2014 INSH-141029 7880 Kgs Adhesive 39400 Total 219700 The AO has not disputed that the value of these goods as per the invoice is USD 219700 and the corresponding value is in Rs. 1,37,40,718/-. These facts were confirmed by the supplier which is also recorded in the books of account of the assessee, ledger account, supporting invoice, Debit Notes and Credit Notes etc. The goods imported by the assessee are perishable in nature having limited shelf life. Therefore, the goods received by the assessee were found to be out dated or expiry date then it would certainly become useless having no value as chemical properties and compounds gets changed after the said period of shelf life. Accordingly, we find that the claim of defective goods reduced from purchase is established by supporting e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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