TATA IRON AND STEEL CO. LTD Vs. COLLECTOR OF CUSTOMS
LAWS(CE)-1991-12-45
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on December 06,1991

TATA IRON AND STEEL CO. LTD. Appellant
VERSUS
COLLECTOR OF CUSTOMS Respondents

JUDGEMENT

HARISH CHANDER,VICE PRESIDENT - (1.) TATA Iron and Steel Company Limited has filed the above captioned 177 appeals being aggrieved from the order passed by the Collector of Customs (Appeals) Calcutta. Since the issue involved is common, the above captioned 177 appeals are being disposed of by this common order.
(2.) BRIEFLY the facts of the case are that M/s. Tata Iron and Steel Company Ltd. had filed refund applications under Section 27 of the Customs Act, 1962 on the ground that the buying commission paid to their London Office should not be included in the assessable value under Section 14 of the Customs Act. It was contended before the Assistant Collector that as per Rule 9(1)(a)(i) of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 buying commission is to be excluded from the transaction value. Against note to Rule 9, 'Buying Commission' has been defined as fees paid by an importer to his agent for the services of representing abroad in the purchase of the goods being valued. In view of this position, it is urged that re -determination of value may be made within the meaning of Section 14 of the Customs Act and consequential refund to be granted to them. The Assistant Collector did not accept the contention of the appellants on the ground that no incorrect assessment was made. The assessment has not been disputed by the Importer and the grievance of the appellants relates to valuation which is coming within the purview of Section 14 of the Customs Act, 1962, whereas Section 27 relates to assessment which covers Section 17 and 18 of the Customs Act, 1962. In any way, Section 27 does not empower the Assistant Collector to interfere the valuation which is covered by Section 14 of the Customs Act and as such no refund could be considered under Section 27 of the Customs Act and in case of any dispute the appellants will be entitled to seek benefit under Section 128 of the Customs Act. In view of this position he had rejected the refund claims. Being aggrieved from the order passed by the Assistant Collector appeals were filed before the Collector of Customs (Appeals). Before the Collector (Appeals) it was contended that in the normal International Trade anyone who raises the invoice cannot be accepted as Buying Agent. He who raises an invoice becomes the supplier for all practical purposes even when the invoice reflects "Buying Commission" as his remuneration. By raising the invoice the Buying Agent instantly loses his identity as the Buying Agent and becomes a supplier. Furthermore, in terms of Rule 4 transaction value denotes the value of imported goods actually paid or payable for the goods when sold for export to India subject to usual adjustment in accordance with the provision of Rule 9. As per Rule 9 of Customs Valuation (Determination of Price of Imported Goods) Amendment Rules, 1988, the Buying Commission would not be included when the same is not included in the price actually paid or payable for the imported goods. Collector (Appeals) observed that in the instant case the buying commission is included in the invoice price actually paid or payable by the importer. As such the contention of the appellants could not be accepted. The invoice supported by documentary evidence pertaining to repatriation amply proves that the invoice price of Tata Ltd. London were actually repatriated in clear consideration of the sale and export of the goods by them to the appellants within the meaning of 'transaction value' in terms of Rule 4 of Customs Valuation (Determination of Price of Imported Goods) Amendment Rules, and he had rejected the appeals. Being aggrieved from the aforesaid order, the appellants have come in appeal before the Tribunal.
(3.) SHRI Kapil Sibal, Senior Advocate with Shri K.K. Lahiri and Shri N. Mookherjee, Advocates have appeared on behalf of the appellants. He pleaded that there are total 263 appeals, out of which the present 177 appeals are listed for hearing before the Tribunal. He argued that Tata Limited, London were appointed as appellants Agent and similarly Tata Incorporated, New York were also appointed as Buying Agent. He stated that 21/2% commission was being paid as agents fee for the services rendered by the Buying Agents. He referred to Rule 9 of the Customs Valuation Rules, 1988 which appears on page 43 of the Paper Book. Shri Kapil Sibal, Learned Senior Advocate pleaded that the issue to be decided is whether buying commission is to be excluded from the assessable value. He argued that the buying agent cannot have the status of principal. He referred to page 8 of the Paper Book which is the letter dated 13th April, 1988 from the Reserve Bank of India for appointment of M/s. Tata Incorporated New York and M/s. Tata Ltd., London as buying agents. He also referred to page 13 of the Paper Book which relates to list of companies and in particular referred to serial number 24 which is the present appellants viz. Tata Iron and Steel Co. Ltd. Shri Kapil Sibal, Learned Sr. Advocate referred to the extract from the Minutes of the meeting of the Board of Directors of the Tata Iron and Steel Company Limited which appears on page 10 of the Paper Book which authorises the appointment of buying agent. He also referred to pages 14, 15 and 17 of the Paper Book. Page 15 relates to appointment as buying agents and page 17 relates to the permission of Reserve Bank of India by letter dated 10th July, 1991 and the relative appointment of buying agents is valid upto 31st March, 1994. The Learned Advocate pleaded that the supplier is Siemens. Documents have been filed in the Paper Book which appears in pages 20 and 23 of the Paper Book. He argued that there is a Telex from Siemens. He had pleaded that the mere fact that invoice has been issued by the buying agent cannot confer the title of ownership. If the transaction is through the supplier direct, agent does not become the owner. Delivery and price are incidence of the transactions, He referred to page 43 of the Paper Book which is Valuation Rule and placed particular reference to Rule 9. He argued that the Assistant Collector should have seen the substance. He referred to the Invoice, Bill of Entry. He argued that the present appeals are for the grant of refund. He pleaded for the acceptance of the appeals. Alternatively, he pleaded that the matter be remanded to the adjudicating authority. In reply, Shri Satish Kumar, the Learned JDR pleaded that buying agent is the supplier. He referred to the proforma invoice and stated that Letter of Credit is in the name of buying agent. He pleaded that the commission.. buying agent is to be included. In support of his argument, he cited the decision in the case of General Marketing and Manufacturing Co. Ltd. v. Collector of Customs, Madras 1987 (27) E.L.T. 344 (Tribunal). He relied on the Order -in -Original and the Order -in -Appeal and pleaded for the dismissal of the appeals. In reply, Shri Sibal, Learned Advocate again pleaded that there is no liability of the buying agent and there is not even a single instance where the Letter of Credit has been opened in favour of the buying agent. He also filed sample copy of the Letter of Credit and also stated that all the letters of credit are opened in the name of the suppliers and not in the name of buying agent.;


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