1995 (10) TMI 93 - AT - Customs

Tribunal allows appeal, grants relief on price, discount, and freight issues.

The Tribunal determined that the price of DM 736.360 C & F Bombay was not inclusive of interest for 180 days credit. The appellants were found ... Inclusion of interest in invoice price - quantity discount on bulk purchase - freight rebate for chartered vessel / bulk cargo - assessable value under Customs Valuation Rules - application of Rule 3(a) read with Rule 4 of the Customs Valuation Rules, 1963Inclusion of interest in invoice price - assessable value under Customs Valuation Rules - Invoice price of DM 736.360 PMT did not include interest for 180 days credit. - HELD THAT: - The Tribunal examined the documentary evidence and found a separate invoice indicating interest chargeable at 20% p.a. for 180 days. On that basis the Tribunal concluded that the declared invoice value of DM 736.360 PMT was not inclusive of interest. Therefore, while comparing prices that are inclusive of interest, an adjustment must be made to exclude interest so as to arrive at a proper assessable value under the Customs Valuation Rules. [Paras 9]Declared price DM 736.360 PMT is not inclusive of interest and interest must be excluded when making comparisons for assessment.Quantity discount on bulk purchase - assessable value under Customs Valuation Rules - Appellants were entitled to a quantity discount of 2-1/2% on purchase of 10,000 MT. - HELD THAT: - The Tribunal accepted that quantity discount on bulk purchases is an admitted and normal commercial practice. Although the Department noted absence of express mention of discount in the invoice, the factual matrix and contemporaneous invoices from the same supplier at lower unit rates (DM 735 PMT) supported the existence of bulk discounts. Assessing the evidence and prevailing prices during the material period, the Tribunal held that the appropriate deduction for quantity discount in the case of 10,000 MT is 2-1/2%. [Paras 10]Allow quantity discount of 2-1/2% to the appellants for 10,000 MT imports.Freight rebate for chartered vessel / bulk cargo - assessable value under Customs Valuation Rules - Freight reduction of US $10 per MT (equivalent to DM 31 PMT) for chartered vessel on cargo of 5,000 MT or more was admissible despite freight not being shown separately. - HELD THAT: - The Tribunal relied on the departmental enquiry with the State Trading Corporation, which confirmed lower freight for chartered vessels, and on a contemporaneous letter from the shipping agent supporting a reduction of approximately DM 31 PMT for shipments of 5,000 MT or more. As the STC was not an interested party and the enquiry was made by departmental authorities, the information was accepted. Applying this factual finding, and having regard to case law recognising freight rebates for bulk cargo, the Tribunal allowed the DM 31 PMT deduction even though the invoice was C&F and did not show freight separately. [Paras 11]Allow deduction of DM 31 PMT towards freight rebate for chartered vessel on the bulk shipment.Final Conclusion: The appeal is allowed; the enhancement of invoice value from DM 736.360 PMT to DM 775 PMT is set aside, and consequential reliefs, if any, shall follow in accordance with law. Issues Involved:1. Whether the price of DM 736.360 C & F Bombay was inclusive of interest for 180 days credit.2. Whether the quantity discount claimed by the appellants was admissible to them at a lower rate.3. Whether the freight chargeable for chartered vessel is less than the normal liner vessel and if so to what extent this deduction should be permitted when the freight has not been shown separately.Detailed Analysis:1. Whether the price of DM 736.360 C & F Bombay was inclusive of interest for 180 days credit:The appellants contended that the price of DM 870 PMT for M/s. Jindal Pipes Ltd. was inclusive of interest for 180 days credit, whereas their invoice price was exclusive of this interest. They supported their claim with a separate invoice indicating that interest at a rate of 20% per annum for 180 days was chargeable. The Tribunal found that there was a separate invoice indicating that interest can be chargeable at a rate of 20% p.a. for credit of 180 days. Therefore, it was determined that the invoice value of DM 736.360 was not inclusive of interest. Consequently, for comparison purposes, any price inclusive of interest must allow for the reduction of interest if included in the invoice value of the imported goods.2. Whether the quantity discount claimed by the appellants was admissible to them at a lower rate:The appellants argued that they were entitled to a quantity discount of 2-1/2% on the purchase of 10,000 MT, citing that bulk quantity discount is a normal trade practice. The Department acknowledged that quantity discount on bulk purchase is generally a normal practice but contended that the discount was not indicated in the invoice, allowing only 1%. The Tribunal observed that it was an admitted position that quantity discount was permissible on bulk purchase. The dispute was about the percentage or quantum of this discount. The appellants referred to several invoices indicating that the invoice value was DM 735/- PMT, C & F, Kandla, which the lower authorities dismissed due to lack of evidence that this value was accepted by Customs. However, the Tribunal held that the appellants were eligible for a quantity discount of 2-1/2% on the purchase of 10,000 PMT, considering the overall circumstances and the prevailing price for identical goods.3. Whether the freight chargeable for chartered vessel is less than the normal liner vessel and if so to what extent this deduction should be permitted when the freight has not been shown separately:The appellants claimed that freight for chartered vessels is less than for normal liner vessels and produced a letter from M/s. Parekh Marine Agency indicating a reduction in freight by US $ 10 PMT for cargo over 5000 MT. The lower authorities, after enquiry with the State Trading Corporation (STC), confirmed that freight chargeable by chartered vessel is less and allowed a reduction of DM 31 PMT. The Tribunal found no reason to disagree with the STC's information, as it was not an interested party. The Tribunal also noted that the appellants had produced supporting evidence from M/s. Parekh Marine Agency. Consequently, the Tribunal agreed with the reduction in freight to the extent of DM 31 PMT for chartered vessels.Conclusion:The Tribunal found that there was no justification to enhance the invoice value from DM 736.360 PMT C & F Bombay to DM 775/- PMT. The appeal was allowed, and the impugned order was set aside, with consequential relief to be provided to the appellants in accordance with the law.