TMI Blog1983 (12) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... t set up by the petitioners at Bhopal in Madhya Pradesh. The imports from the American company took place on principal-to-principal basis without involving any concession or rebate in the price of the product. 2. In the year 1973, the petitioners received an offer from the American company for supply of 4,000 tons of Sevin at the rate of 71.4 U.S. cents per lb. F.A.S. United States ports. The Ministry of Petroleum and Chemicals permitted the petitioners to accept the said offer on condition that 50% of the material so imported by the petitioners would be made over to the State Trading Corporation at the same price. An import licence dated December 29, 1973 was granted to the petitioners in respect of the said import with a condition that 50% of the imports would be delivered to the State Trading Corporation on high-seas at cost price without charging any commission. Accordingly, an agreement was entered into between the petitioners and State Trading Corporation on January 24, 1974, under which the petitioners agreed to transfer to S.T.C. 2,000 metric tonnes of Sevin at the price of 71.4 U.S. cents per lb. It was also agreed that the State Trading Corporation shall bear half of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petent authority on the ground that the invoice and the bill of entry were not recorded and the Government could not verify on what basis 2% had been loaded to the invoice value. The proceedings after remand are still not disposed of. The remaining three revision applications were disposed of by a common order dated July 27, 1979. The revisional authority came to the conclusion that no commission was allowable to the petitioners in respect of the imports and it would not be correct in law to load 2% to the invoice value. On this finding, the revisional authority ought to have allowed all the three revision applications, but the revisional authority felt on scrutiny of the record that the case fell within the purview of Rule 5 of the Customs Valuation Rules, 1963 read with Section 14(l)(b)'of the Customs Act, and therefore, the loading of 2% to the invoice value was proper. The revisional authority held that the petitioners were a 'branch-cum-distributor' of the American company and the expenses ordinarily incurred by the petitioners in that capacity ought to be included while determining the value of imported goods. It was also held that though the expenses incurred by the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsidiary of the exporter, the provisions of sub-rule (a) shall apply as if the importation had been made by a sole agent." The plain reading of this rule indicates that the expenses ordinarily incurred by a sole agent, distributor or indentors are to be included while determining the value of imported goods and if the goods are imported by a branch or subsidiary of the exporter, then the importation is to be treated as made by a sole agent. It is obvious that the expenses are incurred by the sole agent, distributor or indentor because the goods imported by them are further distributed and not used by themselves. The concept of import by agent or distributor is that the import is made not for themselves but further distribution. Provisions of Rule 5(a) would be attracted only in cases where the goods are imported by a sole agent, distributor or indentor. In the present case, the goods are imported by the petitioners for their own consumption. Shri Dalal, learned counsel appearing on behalf of the Department, submitted that the petitioners are a subsidiary of the American company and therefore under sub-rule (b) of Rule 5 the importation by the petitioners will have to be treated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e justly added to the invoice price. The submission overlooks that under clause (6) of the agreement dated January 24, 1974 between the petitioners and State Trading Corporation, it is clearly provided that the State Trading Corporation should bear half of the expenses relating to letter of credit charges, interest and such other expenses, as mutually agreed. This clause conclusively establishes that though the State Trading Corporation was entitled to secure 50% of the consignment imported by the petitioners at the cost price, still the other allied expenses in respect of the said 50% consignment were to be borne by the State Trading Corporation. The petitioners had not taken any liability to bear any expenses in regard to the import for the State Trading Corporation. In my judgment, the revisional authority had clearly misconceived the nature of the import by the petitioners and have erroneously concluded that the expenses incurred by the petitioners in their capacity as a branch of the exporter shall be included while determining the value of the imported goods. 8. Shri Vahanvati is also right in his submission that even assuming that the revisional authority was right in its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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