1996 (5) TMI 180 - AT - Customs

Tribunal adjusts depreciation & trade discount, instructs reassessment.

MEERA LUTHRA Versus COLLECTOR OF CUSTOMS, BOMBAY

MEERA LUTHRA Versus COLLECTOR OF CUSTOMS, BOMBAY - 1996 (87) E.L.T. 76 (Tribunal) Issues: Valuation of imported second-hand Volvo Car, deduction of depreciation, trade discount allowanceValuation of Imported Car:The appellant imported a second-hand Volvo Car and declared an invoice price of lb250, which the Assistant Collector disputed. The Assistant Collector referred to the world car catalogue, valuing the car at lb5971 (inclusive of VAT and Car Tax) after deducting depreciation and adding accessory costs, resulting in a value of Rs. 94,145. The Collector (Appeals) accepted the basic price as lb4889, rejecting the trade discount deduction of 15% claimed by the appellant. The appellant challenged this order, arguing for the deduction of depreciation and trade discount.Depreciation Deduction Dispute:The appellant contested the depreciation deduction method used by the Assistant Collector, claiming that the correct depreciation should have been 10% for four quarters instead of the 71/2% for three-quarters applied by the Assistant Collector. The discrepancy arose from the incorrect import date used for calculating depreciation, leading to a contention for an additional 21/2% depreciation allowance.Trade Discount Allowance Dispute:The appellant asserted that the trade discount of 15% should have been allowed, as per the Assistant Collector's initial assessment based on the world car catalogue price. However, the Collector (Appeals) shifted the valuation basis to the manufacturer's price list provided by the appellant, which did not specify the allowance of trade discount. The appellant argued that the trade discount should still be applicable based on the manufacturer's price list. Additional evidence in the form of letters indicating trade discount was presented, but the Collector (Appeals) found them insufficient to establish the regular practice of offering trade discounts on the manufacturer's price list.Precedent and Decision:The appellant relied on a Tribunal decision in Lt. Col. Hamender Singh Bedi v. COC to support the claim for trade discount allowance. However, the Tribunal differentiated the present case from the cited precedent, emphasizing the lack of evidence showing trade discounts on the manufacturer's price list. The Tribunal highlighted the necessity of concrete material demonstrating the manufacturer's practice of granting trade discounts on the price list. The decision clarified that valuation could be based on the world car catalogue price, manufacturer's net price, or invoice price if other options were unavailable.Judgment and Modification:The Tribunal modified the Collector (Appeals) order by allowing an additional depreciation of 21/2% and instructed reassessment of the assessable value and duty accordingly. The appeal was allowed in part, addressing the discrepancies in depreciation deduction and trade discount allowance.This detailed analysis of the judgment provides insights into the valuation process of imported goods, the significance of accurate depreciation calculation, and the considerations for trade discount allowance based on the provided evidence and legal precedents.