TMI Blog1980 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... such reports and advice, the petitioner-Company asked the U.K. Company to purchase the requirements of the petitioner-Company of cocoa beans at the then prevailing international prices either from West Africa or from Malaysia. In accordance with such orders placed by the petitioner-Company, the U.K. Company actually purchased the cocoa beans for and on behalf of the petitioner-Company. In the case of imports from West Africa, the U.K. Company received delivery of the cocoa beans and stored the same for and on account of the petitioner-Company. A few months prior to the actual requirements by the petitioner-Company of the cocoa beans in its factory in Bombay, the petitioner-Company issued to the U.K. Company shipping instructions for the dispatch of the required quantity of cocoa beans by means of an indent and such cocoa beans were accordingly shipped by the U.K. Company. In respect of these cocoa beans, in the relevant invoices raised by the U.K. Company on the petitioner-Company, the U.K. Company charged to the petitioner-Company the purchase price of the cocoa beans plus handling, rebagging and storage charges as well as the cost of freight and insurance. In the case of imports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purchase on behalf of the petitioner-Company of 250 tonnes of cocoa beans at £ 225 per tonne c.i.f. U.K. The two consignments, ex S.S. Jalagomati and S.S. Indian Valour referred to earlier, form part of this Woodhouse Contract and the corresponding Order being No. B/1729. On 17th January 1973, the U.K. Company informed the petitioner-Company that the price per tonne of the cocoa beans which was £ 225 f.o.b. U.K., would come to £ 282.21 c.i.f. Bombay. On 5th July 1973, the petitioner-Company forwarded to the U.K. Company shipping instructions bearing No. 5436 for the shipment of 800 kgs. Hyfoama and the balance quantity of cocoa beans out of the aforesaid Order No. B/1729 so as not to exceed the total licence value of £ 46,943/. In these shipping instructions the relative import licence number and the period of validity of the licence were also given. The U.K. Company accordingly dispatched 664 bags of cocoa beans aggregating to 41.5 tonnes on board S.S. Jalagomati. The U.K. Company also sent an invoice for £ 11,711.72 at the rate of £ 282.21 per tonne c.i.f. Bombay supported by a letter giving the following particulars: Price per ton f.o.b. U.K. £ 225.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cocoa beans aggregating to 20 tonnes on board Straat Luanda. The U.K. Company also sent an invoice for £6350/- at the rate of £317.50 per long ton. On the arrival of S.S. Straat Luanda in Bombay, the petitioner-Company filed a Bill of Entry showing the assessable value aggregating to Rs. 1,20,823/- inclusive of landing charges. 10. After the aforesaid consignments were received in India and the Bills of Entry were duly filed, the Customs authorities assessed the same at a value of £777.35 per metric tonne in the case of the Jalagomati consignment, £495.03 per metirc tonne in the case of the Indian Valour consignment and £730 per metric tonne in the case of the Straat Luanda consignment and demanded from the petitioner-Company additional differential duty which the petitioner-Company paid under protest. On 8th January 1974, the petitioner-Company submitted to the Customs authorities the requisite refund applications for the difference of duty collected. Thereafter at the behest of the Customs authorities, the petitioner-Company furnished certain information, documents and particulars required by the Customs authorities. After considering the aforesaid refund applications and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out on the basis of the purchase price paid by the importer's principals at the time of the forward purchase cannot be accepted as the price for determining the assessable value. In coming to this conclusion the Collector has given three reasons as under : "Firstly that price is not between the importers and supplier. Secondly, the purchase transaction is not related to any specific importation and thirdly, the principals and the importers are related persons. As against this, there is a price which is quoted in the international markets in respect of this commodity. Therefore, it is possible to determine the price prevalent at the time of sale for delivery at the time and place of importation." 13. At this stage Section 14 of the Customs Act may be recapitulated. It provides for the valuation of goods for purposes of assessment and states that for the purposes of the Indian Tariff Act, 1934 or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be - "(a) the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus the price mentioned in those contracts cannot be said not to be the price between the importer and the supplier as held by the Collector. 16. Mr. Dalal, however, urged that the price mentioned in Order No. 5436 and the price mentioned in the invoice, namely £282.21 per tonne, was not the price between the importer, namely, the petitioner-Company, and the supplier, namely, Woodhouse Drake and Carey Ltd. This contention is fallacious. As stated earlier, the price of £282.21 mentioned in the invoice is comprised of the price per tonne f.o.b. U.K., namely £225, together with bagging, handling and storing charges, buying commission, freight and insurance aggregating to £57.21. Mr. Dalal also relied on the order No. 5434 and the Indent No. 5434. Here also the price of £282.21 stated in this order and invoice, comprised of £225 per tonne f.o.b. U.K. which is the contract rate in the Woodhouse Contract plus bagging, handling and storing charges, buying commission, freight and insurance aggregating to £57.21, in all amounting to £282.21. Mr. Dalal also relied on the Order No. 5441 where the price has been shown at £317.50 per long ton. In the invoice of the seller, namely, Cocoa Mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining to the Malaysian Contract showing the price of £317.50 can avail the respondents nothing, for, in any event, as far as the Malaysian cocoa beans are concerned, this was surely a case of specific purchase transaction being related to a specific importation. Also what cannot be lost sight of is that there is nothing in Section 14 which states that the relevant price is the price which must be related to some specific date of importation. 18. This brings me to the third reason given by the Collector, namely, that the principals and the importers are related persons. The very premise of this reason is factually incorrect as it proceeds on the total misconception that the U.K. Company was the principal of the petitioner-Company. The U.K. Company was not the principal but was merely the agent of the petitioner-Company. This is amply clear from the contracts themselves without necessitating dissection of the telexes and communications exchanged between them. The U.K. Company has even charged its commission to the petitioner-Company. Further what cannot be lost sight of is that under Section 14 it is the seller and the buyer who should have no interest in the business of each other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchased at a price of £225 per ton but the importers' principals charged only £1.13 as buying commission." If this strained "example" was to be emphasised by the Collector surely the petitioner-Company should have been asked to give its explanation. Be that as it may, I hasten to add that this reasoning was fairly not sought to be justified by Mr. Dalal and rightly so. 20. Another ground which, according to the Collr., influenced him was that - "... if it was a transaction between unrelated parties then the suppliers would have charged the price prevalent at the time of shipment irrespective of the price at which they might have procured the goods...." It is a matter of wonderment whether these observations are meant to convey that a transaction cannot be accepted as genuine because a party did not commit a breach of contract to extract a higher price. Further comment is unnecessary and, once again, Mr. Dalal fairly did not seek to justify this curious observation made by the Collector. 21. Mr. Dalal, however, urged that this was not a transaction in the course of international trade because in the Woodhouse Contract both the parties were in U.K. and delivery was to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Malaysian Contract, the U.K. Company having merely acted as the agent of the petitioner-Company. Hence even assuming the petitioner-Company and the U.K. Company have an interest in the business of each other, the same would not be hit by the vice of Section 14 which speaks of the seller and the buyer (and not the principal and agent) having an interest in the business of each other. 23. Mr. Dalal finally urged that the price was not the sole consideration because the U.K. Company has charged its commission. There is also no merit in this contention. The very fact that the U.K. Company charged its commission to the petitioner-Company itself discloses the nature of the relationship between the U.K. Company and the petitioner-Company, viz. that of agent and principal. It has never been even the Department's case that the price was not the sole consideration between the sellers in those two contracts and the petitioner-Company or the U.K. Company. In the facts of this case, the question of price being or not being the sole consideration between the U.K. Company and the petitioner-Company does not even arise. 24. In the result, the impugned order is set aside. Rule is made absolut ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
