Decided on January 21,1991

Gold Plast India (P) Ltd. Appellant


I.J.RAO,VICE -PRESIDENT - (1.) THE point for determination in this appeal is the correct value, for purposes of calculation of customs duty payable, of the goods imported by the appellants, viz., polystyrene resin High Impact grade No. HR 60 against an indent dated 6.5.1989 and letter of credit dated 3.6.1989. The appellants declared a value of US 1050 PMT CIF. Having noticed two other importations of somewhat similar goods at US 1200 PMT CIF (polystyrene resin GP -125 and polystyrene G -144) the Customs felt that the price of the goods was not correctly declared. It was also the feeling of the Customs that the high impact polystyrene was generally costlier than the general purpose polystyrene in the normal international price. Therefore, as recorded in the Assistant Collector's order, the assessable value according to the Customs had to be determined under Rule 11 (presumably of the Customs Valuation Rules 1988) read with Section 14(1) of the Customs Act, 1962. The reason for it recorded by the Assistant Collector was that the declared price by the importer was at variance, with the evidence available with the Department.
(2.) ACCORDINGLY the Customs issued a show cause notice to the appellants and heard them in person. The Director of the appellants who appeared for personal hearing on 31.8.1989 stated that the declared price was the correct price and that their contract was of 6.5.1989. He also filed an invoice of an importer M/s. Gujarat State Export Corporation showing the price of US 990 for 500 MTS contracted on 7.6.1989 with letter of credit dated 8.6.1989 and also another invoice of M/s. Deluxe Sales Corporation showing the price of USS 1050 PMT for high impact polystyrene HR 60 with letter of credit dated 5.6.1989. It is recorded by the Assistant Collector that in the personal hearing, Shri Madan, Director, stated that prices were falling in the international market. Ultimately the Assistant Collector fixed the price at US 1200 PMT and the process by which he did so was as follows, in his own language: As per Section 14(1)(A), rules are subject to Section 14(1). As per Section 2(41), value means as determined under Section 14(1). Moreover as per Rule 11, whenever there is a dispute, the same has to be resolved as per Section 14(1). Because of the undisputed evidence shown by the department, the importers invoice price cannot be accepted. There can be no dispute that the Section 14(1) price at the relevant time (6.5.1989) is US 1200 PMT CIF. Hence I hold that the value should be enhanced to US 1200/ - under Rule 11 read with Section 14(1) of Customs Act, 1962.
(3.) THE Collector (Appeals) upheld the order noting that high impact grade No. HR 60 is costlier than general purpose polystyrene resin GP 125 and G 144, those two varieties were being sold in India at US 1200 in the same week in which the appellants imported the goods and he was unable to accept that the same supplier would charge the two parties so differently or that it represents a normal business trend. (The learned Advocate stated that the same supplier was not involved). Hence this appeal. We heard Shri D.N. Mehta, the learned Advocate. He argued that the Customs authorities wrongly rejected the transaction value comparing incomparables in that the goods whose value was compared with the value of the imported goods were of different grades, the time of import was different, the vessel which carried the goods was different and the supplier was different. He submitted that Customs ignored the evidence of an invoice by the same supplier, for the same goods and the same vessel, produced by the appellants. The learned Advocate submitted that Rule 11 of the Valuation Rules was not a method and argued that so long as the transaction is at arm's length, it is the value for proposes of assessment. Referring to Rule 5 and the note thereto, the learned Advocate argued that even if Rule 4 was found to be not applicable and Rule 5 and other Rules were applied in accordance with the sequence as a statutory requirement, the invoice value of the appellants would still have to be accepted as the price, even if lesser of the prices noticed during the period of 3 months in relation to the importation. The learned Advocate further emphasised that in the first instance value has to be fixed under Rule 4 of the Valuation Rules and only when this cannot be done can the Department go to other Rules. He submitted that application of Rule 11 by the Department was totally illegal.;

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