Customs valuation follows a bona fide revised contract price; provisional assessment must still end in final assessment

Where parties validly revise the contract price in writing before delivery, and no exception under the customs valuation rules is shown, customs valuation must proceed on the genuine transaction value actually paid or payable. The contract addendum and surrounding documents supported the reduced price, with no material indicating sham pricing or clandestine remittance. The commentary also notes that a precedent concerning ocean-going vessels under an exemption notification did not apply to vessels imported for breaking. Where assessment was provisional, the proper officer must complete final assessment under the Customs Act before the matter is concluded.

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Issues: (i) Whether the reduced price recorded by addendum to the memorandum of agreement constituted the assessable transaction value for customs valuation of the imported vessels. (ii) Whether the reliance placed on the decision in Jalyan Udyog was justified and whether the matter required final assessment under Section 18 of the Customs Act, 1962.

Issue (i): Whether the reduced price recorded by addendum to the memorandum of agreement constituted the assessable transaction value for customs valuation of the imported vessels.

Analysis: The vessels were imported for breaking, and in each case the reduced price was recorded in writing by both parties before delivery was taken. Section 14 of the Customs Act, 1962 and Rule 4(1) of the Customs Valuation Rules, 1988 require acceptance of the price actually paid or payable for the particular transaction unless the case falls within the recognised exceptions in Rule 4(2). The contractual documents and the addendums showed mutual variation of the original bargain, and the facts disclosed no material to disbelieve the genuineness of the revised price or to infer clandestine remittance. The clauses describing the sale as on an as is where is basis did not prevent the parties from renegotiating price before title passed on delivery.

Conclusion: The reduced price was rightly treated as the transaction value, but this did not justify interference with the final result reached by the Tribunal because the appeals still failed on the remaining issue.

Issue (ii): Whether the reliance placed on the decision in Jalyan Udyog was justified and whether the matter required final assessment under Section 18 of the Customs Act, 1962.

Analysis: The Tribunal held that Jalyan Udyog dealt with an exemption notification concerning ocean-going vessels subsequently broken up, and its deeming fiction had no application to vessels admittedly imported for breaking. It further noted that, where assessment had been provisional, the proper officer was required to complete the statutory final assessment under Section 18(2) of the Customs Act, 1962, and that course had been overlooked by the appellate authority.

Conclusion: The appellate authority had misapplied Jalyan Udyog, and the matter had to be taken to final assessment by the assessing officer under Section 18(2).

Final Conclusion: The reduced contract price was accepted as the relevant transaction value in principle, but the appellate order could not stand as framed and the assessments were required to be finalised by the proper officer in accordance with the judgment.

Ratio Decidendi: Where the parties validly alter the contract price in writing before delivery and no exception under the customs valuation rules is established, customs valuation must proceed on the genuine transaction value, while any provisional assessment must be completed by final assessment under the Act.

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