1992 (11) TMI 178 - AT - Customs

Tribunal rules on customs discount: 5% allowed, not 9.8%. Assistant Collector to reassess.

The Tribunal concluded that the special discount on imported goods was not permissible under Section 14(1) of the Customs Act, 1962. They allowed a normal ... Valuation Issues:Whether the Department was justified in rejecting the refund claim by disallowing a special discount on imported goods, and if the negotiated price represented the correct value under Section 14 of the Customs Act, 1962.Detailed Analysis:1. Rejection of Refund Claim: The appellants imported goods with a discount of 9.8% deducted from the ex-works price. The Department disallowed this discount, leading to a refund claim rejection. The appellants argued that the discount was normal trade discount and should be allowed. The key issue was whether the discount was special and if the negotiated price accurately reflected the value for customs assessment.2. Appellant's Argument: The Sr. Advocate for the appellants contended that the discount was a normal trade discount and should be considered under Section 14(1) for deduction. They emphasized that prior discussions and negotiations did not make the discount special. The burden was on the Department to prove the discount was special, which they failed to do. The appellants relied on previous Tribunal decisions to support their case.3. Revenue's Argument: The Revenue argued that the discount was special, as it was negotiated under special terms and conditions. They highlighted that the term 'special discount' was used in the modified offer, indicating its uniqueness. The Revenue asserted that the burden was on the party to prove the discount was not special. They referenced previous court decisions to support their stance.4. Tribunal's Decision: After considering both arguments and reviewing the records, the Tribunal concluded that the discount was indeed special, as it was negotiated under unique terms. Special discounts were not permissible deductions under Section 14(1) of the Act. However, considering the lack of a specific relationship between the supplier and the importer and the bulk purchases made by the appellants, a normal trade discount of 5% was deemed permissible.5. Final Ruling: The Tribunal directed the Assistant Collector to re-determine the value by allowing a 5% discount instead of the original 9.8% for customs assessment purposes. The appeal was disposed of based on this decision.In summary, the judgment revolved around the rejection of a refund claim due to the disallowance of a special discount on imported goods. The Tribunal analyzed whether the negotiated price accurately reflected the value for customs assessment and ultimately allowed a normal trade discount of 5% instead of the special discount initially claimed by the appellants.