2002 (8) TMI 648

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.... The carbon black is an item normally imported by users. Whenever carbon black is required by any exporter for manufacture of a final product in which carbon black is an input, he approaches the DGFT for a licence. DGFT some times allows the importer to procure carbon black from the Indian manufacturer. In the licence issued by DGFT, there is an indication of an amount up to which the goods from the Indian supplier can be procured. The Department alleged that the value shown in the licence should be the price for payment of duty under Section 4 of the Central Excise Act. Accordingly, they issued a show cause notice asking the appellants to explain as to why the differential duty amounting to Rs. 37,024/- (Rupees thirty seven thousand twenty....

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....the purpose of Section 4 of Central Excise Act, 1944. It was submitted by him that the appellants issued regular invoice and that it was the value for purpose of levy of duty. It was submitted by him that there was no relationship between the buyers and the sellers and the transaction was at arms length. The ld. Counsel submited that there was an oral agreement on the strength of which the Indian Importer opened a letter of credit in favour of the Indian supplier. He submitted that the letter of credit covered 32774 kgs. of carbon black for Rs. 10,34,367/-. He submits that thus value per metric ton came to Rs. 13,981/- and that their invoice would show that they sold carbon black at a rate of Rs. 13,897/- per metric ton. Explaining the diff....

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....of duty. He, therefore, prayed that the appeal may be rejected. 5. We have heard the submissions of both sides. We note in the instant case that there was no written contract. However, there was an agreement that too was oral on the strength of which the letter of credit was opened. The value shown in the letter of credit is higher than the value indicated in the invoice. In the absence of any written contract or agreement, we hold that the contractual value is represented by the value shown in the letter of credit. Since the contractual price becomes the assessable value as shown in the letter of credit. Therefore, we hold that for the purpose of levy of duty, the price shown in the letter of credit is the assessable value. Even if....