1991 (5) TMI 148 - AT - Customs

Special Discount Excluded in Customs Value Calculation

The Tribunal concluded that a special discount of 4 1/2% extended to appellants based on their long-standing business relationship was not admissible for ... Valuation - Special Discount Issues:1. Interpretation of Section 14(1)(a) of the Customs Act, 1962 regarding the admissibility of additional discount for computation of assessable value.2. Whether a special discount extended based on long-standing business dealings is admissible for determining the assessable value.Analysis:The case involved the import of combing machinery from Japan, where the assessable value was declared with discounts but later disputed by Customs. The appellants claimed a refund based on further discount not considered by Customs. The dispute centered around whether the additional 4 1/2 % discount, given due to long-standing business relations, should be included in the assessable value calculation under Section 14 of the Customs Act, 1962.The appellants argued that the net invoice price should be the assessable value, citing a Bombay High Court decision. They contended that the special discount was part of the ordinary course of trade negotiations and should be included. However, the Department maintained that the special discount was not uniformly available to all buyers, thus not admissible under Section 14(1)(a) of the Customs Act, 1962.The Tribunal deliberated on the nature of the additional discount and its admissibility. It was noted that the discount was extended exclusively to the appellants due to their long-standing relationship with the supplier, making it a special discount not available to all buyers. Referring to a Delhi High Court case, the Tribunal emphasized that the assessable value should be based on prices ordinarily offered for sale to all buyers, not on special discounts.Based on the above analysis, the Tribunal concluded that the special discount of 4 1/2 % was not admissible for determining the assessable value under Section 14(1)(a) of the Customs Act, 1962. The reference to a Bombay High Court decision was deemed irrelevant as it pertained to a different section of the Customs Act. Consequently, the appeal for a refund was rejected.This judgment clarifies the interpretation of Section 14(1)(a) of the Customs Act, 1962 regarding the inclusion of special discounts in the assessable value calculation. It underscores the importance of uniformity in pricing for all buyers and highlights that special discounts based on individual business relationships may not be considered for determining assessable value in customs matters.