TaxTMI 
TaxTMI 
1999 (10) TMI 471
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....A. One of the appellants namely M/s. Borax India Ltd. had established an irrevokable Letter of Credit through the concerned bank on the said U.K. supplier on 21-8-1993 for supply of 2000 M.Ts of the said item at 298 US $ per M.T. FOB Los Angles (USA). Before the shipment was made the foreign suppliers approached the appellants and offered price reduction provided the total quantity of 5000 MTs. was imported as a package deal. Since the offer was lucrative, the appellant Shri J.S. Mehta, who was a Director in M/s. Borax India Ltd. and the other company M/s. Rama Agro Chemical Industries (two of the appellants before us) and a relative of partners' of third appellants namely M/s. Akshay Industries, negotiated with the foreign supplier in this regard. The other two appellants namely Rama Agro Chemical Industries and Akshay Industries having shown interest in importing the remaining 3000 MTs. of the same goods at these prices, this decision was conveyed by Sri J.S. Mehta to the foreign supplier. Accordingly, the Letter of Credit opened by M/s. Borax India Ltd. was amended on 27-9-1993, though the goods had been shipped on 16-9-1993 in view of the confirmation received by the foreign su....
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.... when the goods were imported as CIF, Madras, the freight and insurance element amounts to US $ 57.48 should be added to the manufacturer's price and hence the correct value should be US $-332.48 CIF Madras. The learned Advocates submit that neither of these two grounds are valid in law to rebut effectively the declared transaction value for the reason that no contemporaneous imports of goods either identical or similar from USA have been shown by the Department at US $ 332.48 CIF Madras. The learned advocates further submit that though the department has also objected to the amendment of Letter of Credit on 27-9-1993, though the goods were shipped on 16-9-1993, that by itself does not vitiate the contract between the buyer and the foreign seller, as the contract is independent of the Letter of Credit. The learned advocate submits that the Letter of Credit is merely an arrangement to banking channels for remittance of payments against the goods received. In this connection, he cites AIR 1970 SC 891 - Tarapore & Co., Madras v. Shao Tractory, Moscow, AIR 1981 SC 1426 - UCO Bank v. Bank of India and AIR 1986 Delhi 126 - Food Corporation of India v. Aroson Enterprises Ltd. & Another....
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....mports of certain items manufactured in China but imported from Hongkong as a second sale. It was held therein that the Chinese manufacturer's price was not relevant and that the price contained in the transaction value of the foreign supplier from Hongkong could not be set aside in the absence of any other contemporaneous imports. He submits that the said decision is clearly applicable to the facts of this case also. 5. The learned Advocate also submits that some of these consignments were cleared on advance licence produced by the importers under DEEC scheme claiming exemption benefit under Notification No. 203/92-Cus. and since the validity of the said advance licence and the applicability of the said Notification was not challenged by the department at the time of clearance or subsequently in the present show cause notices, therefore, the duty has wrongly been confirmed on these quantities by the orders impugned. He submits that in the present show-cause notices, the department has not mentioned the said Notification No. 203/92-Cus. In this connection, he cites the decision of the Tribunal in the case of Instamedic International v. CC as reported in 1997 (89) E.L.T. 701....
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....the Bombay High Court judgment as reported in l996 (63) ECR 211 which has attained finality, as the appeal filed against it by the Revenue was rejected by the Hon'ble Apex Court as reported in 1996 (82) E.L.T. A165. He also relies on the judgment of Hon'ble Apex Court in the case of Bhadrachalam Paper Boards Ltd. as reported in 1999 (106) E.L.T. 290 (S.C.). 8. The learned D.R. is at great pains to defend the Orders-in-Original on the following grounds :- (a) He submits that there are only two manufacturers in the world of this item namely M/s. Borax Inc., USA and another in Turkey. The USA manufacturers normally supply the goods at US $ 340 per MTs, whereas the Turkish supply the goods at US $ 335 per MT as per their published price lists. (At this point, the learned Advocates rebut this contention by pointing out that this evidence is not led in the show-cause notice and no copies of the said price lists were made available to the appellants at the original stage.) (b) He submits that since the goods were manufactured in USA and since the manufacturer's price is ....
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....is irrelevant to the issue, in view of the case law already cited. The learned advocates further submit that the price remained same at US $ 298 per MT and only terms of delivery changed from FOB Los Angeles (USA) to CIF Madras. The bank has not raised any objections on this transaction and the entire amount concerned have already been remitted through banking channels. Therefore, in view of this it is clear that no infraction of law have been committed by the present importers, as far as the Letter of Credit is concerned. The learned Advocates also submit that in any case the amendment of Letter of Credit was only with respect to one consignment as the other two consignments were in any case on draft at sight basis. 12. On a careful consideration of the rival submissions and records of the case, including the case-laws cited, we find that the primary and main dispute concerns the alleged under-valuation of the three consignments in question imported by the three appellants noted above. The dispute is reduced to merely whether the import of these goods at a price of US $ 298 CIF Madras represents a correct transaction value under Section 14 of the Customs Act. We are of the....
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....ed above, particularly Judgment of Hon'ble Apex Court in the case of Mirha Exports (supra) and the decision of the Tribunal in the case of Shalimar Industries Ltd. (supra) is that quantity discount can validly lead to price reductions at a mutually agreed upon basis when compared to the manufacturers price on record. (c) The ld. DR has submitted that because in this case the quantity of approximately 5000 MTs was not purchased by one single importer, therefore the said quantity discount was not available. In view of our discussions above, we are not in a position to accept this argument. We have already found that the negotiations were in the form of a package deal by a single indenting agent namely Shri J.S. Metha with a single foreign supplier for the same goods wherein the original contracted quantity was increased from 2000 MTs to 5000 MTs. We also note that the entire consignment was shipped on a single day on the same vessel viz. MV Ranger. Therefore, it is also not a case where the three imports were despatched through various periods of time by the foreign supplier. The impact of this as far as foreign supplier is concerned would be that he could sell almost 5000 MT....