TMI Blog2020 (6) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the same port have been assessed at a much higher price. Thus, the Revenue is relying on conditional acceptance of the declared price as per para 11 of the SVB order dated 22/06/2006. The data given by the appellants confirms and the duty has always been paid on the price contracted with supplier and such price always corresponded to the prevailing price in the international journals. The evidence produced suggests that even when the prices published in international journals at the time of import were much lower the appellants paid duty on the contract prices which were much higher than the prevailing international prices - The dispute is if at the time of contract is not seen as relevant or the price at the time of contract. In the section 14 of the Customs Act, 1962, the price at the time of contract is more relevant. The interpretative Rule to the rule 3(3)(a) clearly lays down that Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price - if the price fluctuation is reasonably explained the same can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 180 days from the date of Bill of Lading At sight (without any credit period) Price agreed upon US $ 668.75 US $ 657 The goods were imported into India by the appellants. The dispute is with reference to the value at which these goods were imported by the appellants. The goods were sold by the appellants to M/s Mosaic Corp. Hong Kong Ltd. @ US $ 966/- PMT. Contract-III These werein turn sold by Hong Kong company to Tata Chemicals Ltd. @ US $ 968 PMT. Contract-IV . 2.4 Learned counsel further pointed out while the goods covered by Contract- II was still under voyage, vide contract dated 05.03.08(Contract III), the appellants had sold the entire quantity of 35,000 MTS of DAP to Mosaic Crop Nutrition (Hong Kong) Limited at the then prevailing international price of US $ 966 PMT. 2.5 Learned counsel further pointed out that Mosaic Crop Nutrition (Hongkong) Ltd. vide contract dated 05.03.08 (Contract IV) had sold the same quantity (35,000 MTs of DAP) to Tata Chemicals Ltd. at a price of US $ 968 PMT. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 to April 2008. 2.10 Learned Counsel placed reliance on the Interpretative Notes to Rule 3(3) of the Customs Valuation Rules. Relevant extract of interpretative notes to Rule 3(3), pertaining to clause (a) is produced below- 2. Rule 3(3)(a) provides that where the buyer and the seller are related, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted as the value of imported goods provided that the relationship did not influence the price. It is not intended that there should be an examination of the circumstances in all cases where the buyer and seller are related. Such examination will only be required where there are doubts about the acceptability of the price. Where the proper officer of customs has no doubts about the acceptability of the price, it should be accepted without requesting further information from the importer. For example, the proper officer of customs may have previously examined the relationship, or he may already have detailed information concerning the buyer and the seller, and may already be satisfied from such examination or information that the relationship did not influence the price . 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was observed that only if goods are imported at a price significantly different from the price prevalent as per International Journals, then the question on the declared value can be raised on the basis of Prevalent International Price. 2.12 Learned Counsel submitted that in the present case, the transaction value of imported goods is based on the price prevalent in the international market at the time of entering into the contract. On many instances, the appellants have paid duties on the price prevalent at the time of contract, even though, the price prevailing at the time of import of such contracted goods was much lower than the price specified in the contract. Reliance is placed on segment II, III, IV of the Table A produced. Even in such scenario, the duty was paid on the contractual price that was determined based on market price prevalent at the time of contract. Thus, it is evident that the transaction value is at arm s length and that the same has not been influenced by the relationship of the parties. Following data is given by learned Counsel: Segment Price prevalent at the time of Contract Price preval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the relationship. In this case, as mentioned above, the related parties have adopted the international prevailing price as reflected in the trade journals, as the basis of arriving at the transaction value. Such an international price is not an influenced price. Hence, the lower authorities are legally not correct in rejecting the transaction value in the present case. 2.14 Learned counsel in his submission also placed reliance on Fretecon Phosphate Report dated 28.08.2008 where KIT imported 400,000 MTS at US $675 PMT from Phos-Chem US. These goods were imported in batches starting from April 2008. Thus, the imports were made during the same period as the Appellants. Learned counsel brought to the notice that KIT entered into a future agreement with Phos-Chem on 08.12.2007 for import of 500,000 MTS at US $662 PMT for shipment between February to October 2008. Thus, the import made by KIT is identical to the imports made by the Appellants as the similar future contact was entered during the same period and the imports were also affected during the same period. He, thus, submitted that in case the transaction value of the appellants is not accepted under Rule 3 (3) (a) of Val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Apex Court in the case of Rajkumar Knitting Mills (P) Ltd. vs. Collector of Customs, Bombay. The relevant date for the purpose of assessment is the date of importation or exportation and not the date of contract. 4. We have considered rival submissions. It is seen that the fact that the appellant M/s Mosaic India Pvt. Ltd. are related to their supplier M/s Mosaic Crop Nutrition LLC, USA is not under dispute. It is also not under dispute that the relationship between the appellant and the foreign supplier namely M/s MCNL, USA has not influenced their transactions in other imports. The peculiar facts in this case are that high sea sales made from the one consignment imported as the same bottom cargo covering two separate contacts, at a much higher price to M/s Tata Chemicals Pvt. Ltd. The flow chart below explains the contracts: The original contract of purchase from M/s MCNLLC, USA was made at 17 December, 2007 and the said consignment was sold on high sea sale basis to MCN (Hongkong) Ltd. on 05/03/2008 at the rate of USD 966/- PMTs. This consignment was further sold on high sea sale basis to M/s Tata Chemicals Ltd. at the rate of USD 968/- PMTs on 04/03/2008. M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in accordance with the provisions of rule 10 and cost incurred by the seller in sales in which he and the buyer are not related; (c) substitute values shall not be established under the provisions of clause (b) of this sub-rule. (4) if the value cannot be determined under the provisions of sub-rule (1), the value shall be determined by proceeding sequentially through rule 4 to 9. The sub rule 3(3) (a) mandates that even if the buyer and seller are related, the transaction will be accepted if the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price. In the instant case, the appellant have claimed that their transactions with the foreign supplier have been subjected to detailed examination by SVB and SVB has come to the conclusion that the transaction between them are not influence by relationship and, therefore, the same can be accepted. SVB order no. SVB/CUS/11/PV/2006 dated 22/06/2006 allows acceptance of the declared price only in the circumstance when no contemporaneous imports at higher price are noticed. The SVB order reads as follows: 8. The importers and the Foreign Suppliers are r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prevailing international price of such goods. The data given by the appellants confirms and the duty has always been paid on the price contracted with supplier and such price always corresponded to the prevailing price in the international journals. The evidence produced suggests that even when the prices published in international journals at the time of import were much lower the appellants paid duty on the contract prices which were much higher than the prevailing international prices. Twenty two such instances were highlights by them along with data. 4.3 The Revenue has relied on the decision of Hon ble Apex Court in the case of Varsha Plastics P Ltd. (supra). The para 21 of the said order reads as follows: 21. In so far as the reference to PLATT s Price Report or other reputed financial journals which are indicators of international prices for the value of imported goods for the purpose of Section 14(1) is concerned, suffice it to observe that once transaction value is rejected on valid grounds, the Customs Authority has to proceed to determine the value of goods by following Customs Valuation Rules and on the basis of contemporaneous import. However, in the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price . We find these circumstances exist in this case and the appellants own imports, other than this, have been assessed on the contract price corresponding to the internationally prevailing prices on the date of contract as reported in international journals. The Revenue is seeking to rely on the decision of the Tribunal in case of Dow Chemicals International P. Ltd. (supra). The para 6.4 of the said order reads as follows: 6.4 The appellant is closely related to the foreign based related supplier and also their indenting agent. The presumption that such a lower price to the appellant is in view of the relationship is reasonable and it is up to the appellant to have the adduced evidence that there was no reduction due to relationship. They have not been able to explain satisfactorily the reason for the difference in price between supply made to them and another importer. Having received a consignment at the rate of US $ 725 from the foreign based related supplier in August, 2001, they have shown valid reason for import at a low ..... X X X X Extracts X X X X X X X X Extracts X X X X
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