S.S. Sekhon, Member (T)

1. These appeals are being decided by this common order as they arise from a common order of the Commissioner (Appeals).

2. The issue involved in these appeals by Revenue against the order of the Commissioner (Appeals) is -

i) Whether the declared contract invoice price could be accepted as the transaction value under Rule 4 of the Customs Valuation Rules 88 and

ii) Whether the demand Show Cause Notice issued for the short levy of duty based on the prices as observed from standard international journals i.e. PLATT (for South East Asia)

3. It is the case of Revenue that Chem System Korea and PCI Plastics (Asia/Far East Asia) and PLATT publications, were showing-much higher prices than prevailing in the market in the course of wholesale trade/transactions and there was no reason put forth by the importer why the above international journal prices were not valid. There was also no evidence or any convincing reason as to why the suppliers of the consignment under import had effected the supplies at a price lower than that prevailing in the international market. Besides, the prices accepted at Chennai Port for assessment of the same goods were also corroborative that the declared price especially of HDPE (Film Grade) as declared in the present case was not correct. It was also urged before us that the price as accepted in many Bills of Entry relied upon by the importer could not be compared with the present case since from the BEs produced, it could be verified whether the same were investigated and the date of the contract on which the supplies were effected on these BEs were not available. It was also contended on behalf of the Revenue that in the present case the BEs were assessed at the declared value in normal course of assessment and the declared value was accepted as correct and clearances were allowed under Section 47 of the Customs Act, 1962, although it was only after such confirmation enquiries were conducted, which recorded that the prices were not correct and demands were issued and it was submitted in this view of the matter that the Commissioner (Appeals) order should be set aside and the Revenues appeals allowed. The importers argued that the quantity difference was not sustainable to effect acceptance of the declared price and also the importers had agreed to pay the duty on the loaded price for the part consignment.

4. It is found that the Commissioner (Appeals), vide impugned order, has discussed in detail as to why the loading of the price, as effected by the lower authorities, cannot be sustained. His findings are required to be reproduced to appreciate that there is no material in Revenues appeals filed, now before us, to sustain the appeals. The relevant portions of the order are -

I have carefully considered the facts on record and the submissions made by the appellants. Since the issue involved in all the appeals is common, I am deciding the subject appeals by this common Order-in-Appeal.

5. The bills of entry which were finally assessed have been re-opened and the value declared by the appellants has been loaded by the adjudicating authority on the ground that the price prevailing in the international market for HDPE as reported in CHEM System, PLATT and other publications were much higher. The defence made by the appellants before the adjudicating authority in the form of computer print out of Bombay Customs House and the bills of entry in other cases has been countered by the adjudicating authority by stating that computer print out is for different period and that the bills of entry do not mention the period when the contracts were made and that no investigations were done in those cases, therefore, he has refused to accept them as cogent evidences. He has also referred to the prices prevalent in the imports made at Chennai Port for the similar goods. Based on these conclusions, the adjudicating authority has enhanced the price of HDPE film grade from US $ 775 P.M.T. to US $ 820 and PP from 765 to 790 US $ PMT.

6. The appellants have countered the basis of the adjudicating authority for enhancing the value as illegal. As regards the reliance of the adjudicating authority on the prices quoted in various journals referred by him, the appellants have stated that these are commercial publications only giving general trend of prices and they are not the prices for export to India and that as per Rule 4(1) of the Customs Valuation Rules, 1988, the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, they have stated that there are certain exceptions where this proviso cannot be applied, but their case does not fall within those exceptions. They have relied upon the decision of Tribunal in the case of PAC systems, wherein it is held that transaction value not to be discarded - transaction value has to be accepted except in the circumstances referred in the proviso (a) (b) (c) (d) of Sub-rule (2). This decision of the Tribunal was upheld by the Supreme Court as reported in : 1993 (67) ELT 209 (SC). In this regard, they have also referred to the decision of Tribunal in the case of Sippy Pramod Steel Alloys Pvt. Ltd. reported in : 1990 (45) ELT 444 (T), wherein the Tribunal held that merely by replying on the prices quoted in the metal bulletins, the value cannot be enhanced, as these are only indicative prices and not confirmed prices and the confirmed price is one at which the contracts are entered and LCs are opened.

6.1 As regards the reliance of adjudicating authority on the bills of entry of imports made at Chennai Port, the appellants have claimed that these bills of entry have not been produced before them so that they could have countered them. They have claimed that imports made at Chennai Port are at higher price, however, the quantity imported in those case is admittedly much smaller.

7. The appellants have further argued by producing bills of entry of the same goods imported at various Customs Houses indicating prices at lesser value than the price at which they have imported and therefore as per Sub-rule (3) of Rule 5 of the Custom Valuation Rules, 1988, the lowest value of the various imports of the identical goods should be taken, they have further submitted that the adjudicating authority in the impugned order states that because they had paid the duty at higher value, therefore, the same is acceptable to them. In this regard, they have submitted that the duty was paid by them under protest without prejudice to the rights and liabilities arising from the. They have relied upon the decision of the Tribunal in this regard in the matter of Khushiram Biharilal as reported in : 1997 (94) ELT 129 (T), wherein it is held that acceptance of enhanced value does rot hold that the appellants have given up their right to challenge the same in appeal in accordance with the law. The offer to pay duty under protest was for the purpose of obtaining clearance and cannot be construed as acceptance of the loaded value for purpose of valuation or licence. They have also stated that the bills of entry relied upon by the AC as discussed in the impugned order are not comparable as in their case they have imported the goods from a manufacturer and practically a shipload of goods has been imported which by any stretch of imagination cannot be compared with the prices quoted in the bills of entry or the prices reflected in the journals. They had entered into a contract with the manufacturer and the contract was entered on the principal to principal basis. They have stated that it is settled law that once the Advance licence has been issued for import of a particular commodity, it is not open to the Customs authorities to act beyond the description and conditions and hold that the licence was issued erroneously. The appellants have also relied upon the decision of the Tribunal reported in : 1994 (71) ELT 310 (T) in the case of Parekh & Co., wherein the Tribunal relying upon the decision of Honble Calcutta High Court in the case of Sandip Agarwal reported in : 1992 (62) ELT 528 (Cal) held that if the transaction value is available, i.e. the price actually paid or payable is available, then the assessable value shall be determined by accepting the price actually paid or payable unless it is found to be not genuine.

8. The provisions of law which are applicable in this case are the Customs Valuation Rules, 1988. Rule 3 of these rules states that the value of imported goods shall be the transaction value. Rule 4 states that the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, subject to adjustments in accordance with provisions of Rule 9, which says that certain expenses towards cost and services rendered by the buyer shall be included in the assessable value. Where the transaction value is not available, the value for the purpose of levy of Customs duty is to be ascertained by proceeding sequentially through Rules 5 to 8 of these rules. In Sub-rule 1(a) of this rule, it is stated that the value of imported goods shall be the transaction value of identical goods sold for export to India; Sub-rule (1)(b) of this rule states that the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of the imported goods; Sub-rule (3) of this rule states that if more than one transaction value of identical goods is found, the lower of such value shall be used to determine the value of imported goods. Rule 6 states that the value of imported goods shall be the transaction value of similar goods sold for export to India. Interpretative Note to Rule 4 states that price actually paid or payable is to be considered as assessable value. Note to Rule 4(2)(b) states certain exceptions wherein if the sale or price is subject to some conditions or consideration for which a value cannot be determined with respect to the goods being valued, the transaction value shall not be acceptable to Customs purposes.

9. The perusal of these rules reveal that in the present appeals, the transaction value should have been accepted by the lower authority for the levy of Customs duty for the reason that the appellants had imported the goods directly from the manufacturer and after entering into a contract with the foreign supplier and by opening a Letter of Credit with the bank and also for the reason that the adjudicating authority has not doubted the genuineness of the invoice of the foreign supplier. The reliance of adjudicating authority on the imports made at Chennai Port and other bills of entry for similar imports also is not comparable with the imports made by the appellants for the reason that for comparison, the quantities imported in the bills of entry relied by the lower authority for loading value shall be substantially the same, apart from various other factors to be considered for treating a particular import as comparable or contemporary import. On the other hand, the appellants have produced copies of bills of entry for the imports made of the similar goods at various ports in India during the similar period, wherein the prices are even lesser than the price at which the appellants have imported. On perusal of some of these bills of entries, I find that in case of B/E No.93843 dt. 25.4.97, M/s. Kothari Sales Agencies, Delhi, have imported HDPE LH-148 80.000 MTs at US $ 675 PMT C&F, in the case of bill of entry No. 04078 dt. 5.5.97, M/s. Rukmani Polymers Pvt. Ltd., Delhi, have imported HDPE F-600 of 240.000 MTs at US $ 700 PMT C&F, in the case of B/E No. 4247 dt. 8.5.97, M/s. Saru Plastics Panchmahal have imported HDPE LH-148 80.000 MTs at US $ 680 PMT C&F at Kandla Custom House, in the case of Bill of Entry No. 04260 dt. 8.5.97, M/s. Vini Plastic Centre, Indore, have imported HDPE Yuclair 25000 16.000 MTs at US $ 710 PMT C&F at Kandla Customs House, in the case of Bill of Entry No. 4077 dt. 5.5.97, M/s. Rukmani Polymers P. Ltd. have imported HDPE F-600 256.000 MTs at US $ 700 PMT C&F at Kandla Custom House, in the case of Bill of Entry No. 4025 dt. 1.5.97, M/s. Vishal Corporation, Ahmedabad, have imported HDPE F-600 16.000 Mts at US $ 730 PMT C&F at Kandla Custom House, in the case of Bill of Entry No. 3594 dt. 29.4.97 M/s. Puja Poly Plastics P. Ltd., Delhi, have imported 64.000 MTs HDPE 8303 at US $ 700 PMT C&F at Kandla Custom House, in the case of Bill of Entry No. 5983 dt. 19.6.97 M/s. Rukmani Polymers Pvt. Ltd., Delhi, have imported 96.000 Mts HDPE B-303 at US $ 770 PMT C&F at Kandla Custom House, in the case of Bill of Entry No. 5984 dt. 19.6.97 M/s. Rukmani Polymers Pvt. Ltd., Delhi, have imported HDPE B-303 112.000 MTs where they have declared US $ 700 PMT C&F at Kandla Custom House which has been enhanced by the Customs authorities to US $ 770 PMT, in the case of Bill of Entry No. 6010 dt. 19.6.987 M/s. Puja Poly Plastics P. Ltd., Delhi, have imported 256.000 MTs of HDPE declaring value as US $ 700 PMT C&F at Kandla Custom House which has been enhanced by the Kandla Custom authorities to US $ 770 PMT, in the case of Bill of Entry No. 4018 dt. 1.5.97 M/s. Vishal Corporation, Ahmedabad, have imported 16 MTs of HDPE F-600 declaring value US $ 700 PMT C&F at Kandla Custom House which has been enhanced by the Kandla Custom authorities at US $ 730 PMT, in the case of Bill of entry No. 4017 dt. 1.5.97 M/s. Vishal Corporation, Ahmedabad, have imported 16 MTs of HDPE F-600 declaring value as US $ 700 PMT C&F at Kandla Custom House which has been enhanced by the Kandla Custom authorities to US $ 730 PMT, finally in the case of Bill of Entry No. 5780 dt. 15.7.97 M/s. Associated Plastic Industries, Bhavnagar, have imported 17 MTs HDPE 5205 at US $ 710 PMT C&F at Kandla Custom House where the Custom authorities have enhanced it to US $ 738 PMT.

9.1 From the above study, it is revealed that the contemporary imports of HDPE F-600 in the month of May 97 was US $ 700 to 730 PMT for smaller quantities like 240 MTs and 16 MTs, whereas on the other hand, the appellants have imported break bulk cargo at US $ 775 PMT which is a price higher than the actual imports made at the same port in India, therefore, the price declared by the appellants is the genuine price which has been obtained directly from the manufacturer.

9.2 As per Rule 4(1)(a) of the Customs Valuation Rules, 1988, if the transaction value is not to be accepted, the price of other imports is to be considered for ascertaining the assessable value and Sub-rule (3) of this rule states that if more than one transaction value shall be used to determine the value of imported goods. Thus, if the Department did not want to accept the transaction value as per Rule 3 of these rules, applying this sub-rule, the lowest price for import of identical goods should have been considered and in any case the price declared in the invoices of the appellants was the correct price for levy of Customs duty.

10. No basis can be made on the prices quoted in the journals for ascertaining the transaction value as these prices are only indicative prices which give the general trend of the international market and it is not the price which the buyer and seller will take as basis for entering into contract as the actual contract for sale is dependent upon various commercial factors and in a given case the contracted price may be less or more than the prices quoted in the journals. This apart, even if the prices quoted in the journals such as PLATT etc. are to be considered, it is seen from the record produced by the appellants (annexure G of the Paper Book) that the goods have been purchased at the international price prevailing at the time of contract and this price is comparable with the PLATTs price available at that time, which was on 10.1.97 770-800 for HDPE and 740-750 US $ for PP, on 15.1.97 770-780 for HDPE and 760-780 US $ for PP, the appellants have entered into contract on 15.1.97, therefore, these quotations from PLATT are relevant. On the other hand, the adjudicating authority in the impugned order while highlighting the prices prevailing in the international market as per the various journals, he has shown the trend for the whole month, whereas, the appellants have given PLATT prices for the specific dates which are relevant to the date of contract entered into by them with the foreign supplier and therefore they are more specific, accurate and relevant.

10.1 Even assuming that the price at which the appellants have entered into a contract are on lower side, the price could still be considered as genuine for the reason that the discount and freight on quantity (break bulk cargo) which are two important factors on which the price is bound to vary if the quantity contracted for purchase is quite substantial as in the case of appellants. Moreover, I find that the price which has been enhanced by the adjudicating authority is only 5.18% more than the price which the appellants have declared and keeping in view the international trade practice to allow quantity discounts and the advantage of freight because of the break bulk cargo, the appellants have got, and the fact that the appellants have purchased goods directly from the manufacturer, the price declared by the appellants is genuine and not required to be loaded because had it not been the break bulk cargo and substantially a large quantity, the price would have been something adopted by the adjudicating authority, or even more.

11. The appellants have also relied upon certain decisions of the Courts of law, viz. the Tribunal in the case of PAC Systems reported in : 1992 (58) ELT 131 (T) which has been upheld by the Supreme Court as reported in : 1993 (67) ELT 209 (SC). They have also relied upon the decision of Tribunal in the case of Sippy Pramod Steel Alloys Pvt. Ltd. as reported in : 1990 (45) ELT 444 (T). It has been held in these judgments that transaction value has to be accepted, unless these are falling under the mischief of proviso (a) (b) (c) and (d) of Sub-rule (2) or Rule 4 of the Customs Valuation Rules, 1988. The appellants are not falling under this mischief and therefore the transaction value has to be accepted. It is also held in these judgments that merely by relying on the prices quoted in the metal bulletins, the value cannot be enhanced, as these are only indicative prices and not confirmed prices, and the confirmed price is one at which the contracts are entered and Letter of Credit is opened. In the present case, the contract has been entered between the appellants and the manufacturer abroad at the rate of US $ 775 PMT for HDPE and US $ 765 PMT for Polypropylene, on 15.1.97 and after the confirmation of contract, the appellants have opened LC on 17.3.97 at the same rate. Therefore, I find that the findings of the adjudicating authority in the impugned order that the appellants sought amendment in the contract, including the extension of the date of shipment and therefore this being the material amendment, the price mentioned in the contract cannot be the basis for determining the price, is not correct, in as much as, due to non-availability of the ship, the date of shipment was extended in the contract.

12. The appellants have also contested that the Bombay Custom House is allowing clearances of the same goods at the prices which are even much less than the declared price. The appellants have also informed the Assistant Commissioner of Customs, Custom House, Kandla, vide their letter dt. 30.6.97 (page 66 of paper book) that they are paying the differential duty demanded under protest and also reserve their right to be heard in person before the same is finally decided. The adjudicating authority has also accepted the fact that the appellants have paid the duties under protest, in his impugned order, in spite of that the finding of the AC that because the appellants have paid the duty demanded and have cleared the consignments and they have accepted the loading of value, is not correct. In this connection, the appellants have also relied upon the decision of the Tribunal in the case of Kushiram Biharilal reported in : 1997 (94) ELT 129 (T), wherein, it is held that acceptance of enhanced value does not hold that the appellants have given up their rights to challenge the same appeal. The Tribunal held that if the value was to be loaded, appellant cannot refuse to pay duty on such value if release of goods was desired. The order to pay duty was for the purpose of obtaining clearance and cannot be construed as acceptance of the loaded value for the purpose of valuation. The Tribunal held that in such circumstances, it can be said that appellants did not accept the loaded value so as to preclude continued challenge of the same".

5. Perusal of the above detailed findings and reasoning and the fact that the Honble Supreme Court in the case of C.C. Visakapatnam v. Adani Exports [2002 (416) ELT A 213] has not upheld the Commissioners appeal against the Tribunals decision on in applicability of PLATT price, as held by the Tribunal in the case reported in 2001 (116) ELT 715, which has been followed subsequently in many cases. In view of the findings arrived at by the Commissioner (Appeal) and in view of the settled law, we find no merits in the present appeal filed by the Revenue. Consequently appeal is to be dismissed.

6. Ordered accordingly.

(Pronounced in Court on 21.10.2004)