TaxTMI 
TaxTMI 
2023 (6) TMI 375
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....be no premium paid and the said public sector undertaking will be selling the product on High Seas Sale Basis at the contracted price, that is a price at which they have purchased from ADNOC. 3. Learned counsel pointed out that the revenue has seeking 2% Notional Commission High Seas Sale. He pointed out that the addition of 2% High Seas Commission has been held to be irregular by the Tribunal in the case of Indian Farmers Fertilizer Co-Operative Limited.-2020 (373) ELT 530. He also relying on the circular no. 11/2010-Cus. dated 3rd June, 2010 wherein it has been held that the such addition of 2% High Seas Sale Commission is not proper. 4. Leaned AR relies on the impugned order. He points out that the appellant has failed to produce the necessary documents to establish the correctness of High Seas Sale Price. 5. We have considered the rival submissions. we find that the issue regarding addition of Notional Commission at the rate of2% of high Seas Sale price has been examined by Tribunal in the case of Indian Farmers Fertilizer Co-Operative Limited.-2020 (373) ELT 530. In the said decision following has been observed:- "32. The finding recorded by the Principal Com....
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....as to go for best judgment method prescribed in Rule 9 of CVR, 2007. It is established practice that where data regarding actual commission is not available, 2% high seas sale commission is to be added to arrive at the correct assessable value of the imported goods." (emphasis supplied) 33. In this connection, the Circular dated 11th May, 2004 issued by C.B.E. & C. has been referred to by the Principal Commissioner. On an analysis of the said Circular, a finding has been recorded that High Seas Sale commission has to be included in the assessable value and the only issue that needed to be decided was whether the price at which the High Seas Sale was taking place between the Government of India and the Appellant could be considered as a price at which international transfer of goods was taking place in terms of Rule 4. The Principal Commissioner noticed that the price paid by Appellant to the Government of India was a pool price of US $ 83 per MT, whereas the price paid by the STE to the exporter was US $ 300 Per MT. The pool price, therefore, was an artificial price at which the Appellant sold the goods to the farmers. Thus, this was not the price at which interna....
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....aid by the last buyer is being taken as the value for the purpose of assessment. In some of the custom houses, however, audit has raised objection stating that if, in a particular transaction, there were about three/four high-seas-sales, then high-seas-sales Service Charges @ 2% has to be added to the CIF value, for each such transaction. 2. The matter has been examined taking into account the Advisory Opinion 14.1 of the GATT. Valuation Code, which stipulates that if the importer can demonstrate that the immediate sale under consideration took place with a view to export the goods to the country of importation, then such transaction would constitute an international transfer of goods. The later transaction which led to the import would be the relevant transaction for assessment and Rule 4 of Customs Valuation Rules, 1988 would apply. Hon‟ble Supreme Court, in the case of M/s. Hyderabad Industries Limited [2000 (115) E.L.T. 593 (S.C.)] have also upheld that the Service Charges/high-seas-sales-commission (actuals) are included in the CIF value of imported goods. Therefore, it is clarified that the actual high-seas-sale-Contract price paid by the last buyer would const....
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.... The issue that arose for consideration was regarding the constitutional validity of proviso (II-i) to Rule 9(2) of the 1988 Customs Valuation Rules. It was contended that the proviso was not only ultra vires Section 14(1) and Section 14(1)A of the Customs Act, but was also violative of Article 14 and Article 19 of the Constitution. The High Court had upheld the validity and the writ petition was dismissed. The Supreme Court observed that a conjoint reading of the provisions of Rules 3 and 4 of the 1988 Customs Valuation Rules would make it clear that the value of the imported goods has to be the transaction value and in cases where the transaction value cannot be determined, such a value has to be determined by resorting to Rules 5 to 8 in a sequential order. Thus, normally the value of imported goods has to be the transaction value, which means the price "actually paid" or "payable" for the goods imported. Only when such a value cannot be determined, that resort to Rules 5 to 8 in a sequential manner has to be taken. Once the transaction value is arrived at, adjustments to this value has still to be made in accordance with the provisions of Rule 9. Only thereafter, the exact "tra....
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....ransaction‟ price namely, the price "actually paid or payable for the goods". It is in this context, that the Supreme Court observed : "(26) On the aforesaid examination of the scheme contained in the Act as well as in the Rules to arrive at the valuation of the goods, it becomes clear that wherever actual cost of the goods or the services is available, that would be the determinative factor. Only in the absence of actual cost, fictionalised cost is to be adopted. Here again, the scheme gives an ample message that an attempt is to arrive at value of goods or services as well as costs and services which bear almost near resemblance to the actual price of the goods or actual price of costs and services. That is why the sequence goes from the price of identical goods to similar goods and then to deductive value and the best judgment assessment, as a last resort. (27) In the present case, we are concerned with the amount payable for costs and services. Rule 9 which is incorporated in the Valuation Rules and pertains to costs and services also contains the underlying principle which runs though in the length and breadth of the scheme so eloquently. It categorical....
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....e to the actual cost. Addition of 1% of free on board value is thus, in the circumstance, clearly arbitrary and irrational and would be violative of Article 14 of the Constitution. ... ... ... (34) In the present case before us, the only justification for stipulating 1% of the F.O.B. value as the cost of loading, unloading and handling charges is that it would help customs authorities to apply the aforesaid rate uniformly. This can be a justification only if the loading, unloading and handling charges are not ascertainable. Where such charges are known and determinable, there is no reason to have such a yardstick. We, therefore, are not impressed with the reason given by the authorities to have such a provision and are of the opinion that the authorities have not been able to satisfy as to how such a provision helps in achieving the object of Section 14 of the Act. It cannot be ignored that this provision as well as Valuation Rules are enacted on the lines of GATT guidelines and the golden thread which runs through is the actual cost principle. Further, the loading, unloading and handling charges are fixed by International Airport Authority. ... ... ... ....
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....hat the price actually paid or payable for the goods will not be treated as transaction value where the buyer and the seller are related with each other. In such cases, there can be a presumption that the actual price which is paid or payable for such goods is not the true reflection of the value of the goods. This Section also provides that normal price would be the sole consideration for the sale. However, this may be subject to such other conditions which can be specified in the form of Rules made in this behalf. (23) As per the first proviso of the amended Section 14(1), in the transaction value of the imported goods, certain charges are to be added which are in the form of amount paid or payable for costs and services including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner which can be prescribed in the rules. Sub-section (2) of Section 14, which remains the same, is an over-riding provision which empowers the Board to fix tariff values for any class of imported goods or export goods under certain ci....