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2020 (6) TMI 285
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....ared by the appellants was at arms-length. This conclusion was reached on the basis of the fact that the price arrived at by the parties are based on prices reflected in international bulletin like FMB International Price guide. 2.1 Learned Counsel submitted that even today, the SVB has been holding the view that relationship has not influenced the value of the goods imported by the appellants. The appellants and supplier determine the transaction value prevailing international price based on the price bulletin. Thus, the relationship had never played any role in determining the price of the import of goods from the related party suppliers. 2.3 Learned counsel further pointed out that the appellants entered into two independent contracts dated 17.12.2007. The salient features of these two contracts are as under: Features Contract - I (33-35) Contract - II (36-38) Commodity Diammonium Phosphate Diammonium Phosphate Date of Shipment March 2008 March 2008 Payment Terms Payment to be made at 180 days from the date of Bill of Lading At sight (without any credit period) Price agreed upon US $ 668.75 US $ 657 The goods were i....
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....Appeal dated 11.03.2011 upheld the aforesaid OIO dated 14.09.2009. 2.9 Learned counsel argued that as per Fertecon Phosphate Report dated 20.12.2007 the prevalent rate during December 2007 was US $ 575-610 PMT plus freight charges. The Appellants entered into the contracts with M/s Mosaic Crop Nutrition LLC, USA on 17th December 2017 for 20,000 MTS at US $ 668.75 PMT and 35,000 MTS at US $ 657 PMT. Thus, it is evident that the agreed upon price was based on international price prevalent at that time. That's the price actually paid for the goods imported by the appellants. It is further pointed out by Learned Counsel that purchase by Tata Chemicals Ltd. was during the month of March 2008 on spot price. Tata Chemicals Ltd. purchase price was determined basis of on the international price prevalent at that during Month of March 2008. He placed reliance upon various reports evidencing price during the month of January 2008 to April 2008. 2.10 Learned Counsel placed reliance on the Interpretative Notes to Rule 3(3) of the Customs Valuation Rules. Relevant extract of interpretative notes to Rule 3(3), pertaining to clause (a) is produced below- 2. Rule 3(3)(a) provides tha....
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.... also placed Reliance on the case of Bureau Veritas - 2003 (156) E.L.T. 688 (Tri. - Mumbai)(Para 20, 21, 23) which was upheld by Supreme Court (judgment reported in 2005 (181) E.L.T. 3 (S.C.)) where it was observed that the transaction value is acceptable in a case of related party transaction if the contract value is determined based on international publications that depicts the volatile price of the product. Further it was also observed that price fluctuation subsequent to contract will not affect the transaction price. He further placed reliance upon judgment of Aggarwal Industries - 2011 (272) ELT 641(para 12) where Hon'ble Supreme Court ruled that different prices for the same commodity contracted to be supplied under different contracts entered into at different points of time acceptable even though the goods are imported on the same date. Further, in the case of Intellect Components Co. - 2017 (345) ELT 677(Para 4) it was observed that only if goods are imported at a price significantly different from the price prevalent as per International Journals, then the question on the declared value can be raised on the basis of Prevalent International Price. 2.12 Learned Counsel....
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.... time of the contract and same was taken into the consideration by the SVB to rule that the contractual value has not been influenced by relationship. However, the department has wrongly overlooked the said order. 2.14 Learned Counsel argued that the observation in para 11 of the SVB order does not mean that the customs department has to reject the transaction value necessarily and resort of other valuation on the basis of identical goods imported into India. Even in such a situation, it is open to the importer-assessee-appellants that in terms of Interpretative Rule 3(3), the value can be accepted and demonstrated that the transaction value has not been influenced by the relationship. In this case, as mentioned above, the related parties have adopted the international prevailing price as reflected in the trade journals, as the basis of arriving at the transaction value. Such an international price is not an influenced price. Hence, the lower authorities are legally not correct in rejecting the transaction value in the present case. 2.14 Learned counsel in his submission also placed reliance on Fretecon Phosphate Report dated 28.08.2008 where KIT imported 400,000 MTS at US $6....
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....Apex Court in the case of Varsha Plastics Pvt. Ltd. vs Union of India 2009 (235) ELT 193 (SC) to assert that the price printed in the journals are not irrelevant in the absence of contemporaneous imports. He argued that Hon'ble Apex Court pointed out that reliance on said journals is not unreasonable in such circumstances. He also relied on the decision of Tribunal in the case of Dow Chemical International Pvt. Ltd. vs CC, Kandla 2008 (226) ELT 420 (Tri- Ahd.) to assert that in case of related parties the onus to establish that the price was reduced due to genuine commercial considerations is on the appellant. He also relied on the decision of Hon'ble Apex Court in the case of Rajkumar Knitting Mills (P) Ltd. vs. Collector of Customs, Bombay. The relevant date for the purpose of assessment is the date of importation or exportation and not the date of contract. 4. We have considered rival submissions. It is seen that the fact that the appellant M/s Mosaic India Pvt. Ltd. are related to their supplier M/s Mosaic Crop Nutrition LLC, USA is not under dispute. It is also not under dispute that the relationship between the appellant and the foreign supplier namely M/s MCNL, USA has no....
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.... between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time. (i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India; (ii) the deductive value for identical goods or similar goods; (iii) the computed value for identical goods or similar goods: Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of rule 10 and cost incurred by the seller in sales in which he and the buyer are not related; (c) substitute values shall not be established under the provisions of clause (b) of this sub-rule. (4) if the value cannot be determined under the provisions of sub-rule (1), the value shall be determined by proceeding sequentially through rule 4 to 9. The sub rule 3(3) (a) mandates that even if the buyer and seller are related, the transaction will be accepted if the exa....
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....imately corresponded to the price at which they have purchased such goods i.e. USD 668.75/- PMT. He pointed out that even the consignment imported by Tata Chemicals Ltd. was originally purchased by the appellants from M/s MCNLLC (USA) at a rate of 657 PMT. He pointed out that the same was sold on high sea sale basis to M/s MCN (Hongkong) Ltd. in the month of March, 2008. He pointed out that high sea sale price at which they sold the goods to M/s MCN (Hongkong) Ltd. at the rate of USD 966 PMT was the then prevalent international price. He pointed out that even M/s MCN(Hongkong) Ltd. also sold the said goods to M/s Tata Chemicals Ltd. at the price USD 968 PMT which also corresponded to the prevailing international price of such goods. The data given by the appellants confirms and the duty has always been paid on the price contracted with supplier and such price always corresponded to the prevailing price in the international journals. The evidence produced suggests that even when the prices published in international journals at the time of import were much lower the appellants paid duty on the contract prices which were much higher than the prevailing international prices. Twenty tw....
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.... price at the time of contract. In the section 14 of the Customs Act, 1962, the price at the time of contract is more relevant. Revenue is also seeking to rely on the para 11 of the SVB order. Para 11 reads as follows: "11. If contemporaneous imports at higher prices or payments other than the invoice value by the importers to the Foreign Suppliers are noticed, the valuation of the imported goods may be done under the appropriate provisions of the Valuation Rules." It is seen that the para 11 of the SVB order cannot be seen in isolation. The interpretative Rule to the rule 3(3)(a) clearly lays down that "Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price". We find these circumstances exist in this case and the appellants own imports, other than this, have been assessed on the contract price corresponding to the internationally prevailing prices on the date of contract as reported in international journals. The Revenue is seeking to rely on the decision of the Tribunal in case of Dow Chemicals Inte....