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Mineral and Metals Trading Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(15)ELT148TriDel
AppellantMineral and Metals Trading
RespondentCollector of Customs
Excerpt:
.....all the relevant documents connected therewith are added together.according to him, therefore, the invoice price for the balance lot of 500.000 mt should have been accepted for assessment purposes, being in conformity with the provisions of section 14 of the customs act. he also emphasised the fact that the appellants have no special relationship with the foreign suppliers of the goods, and all relevant documents pertaining to the transaction in 1983 were made available to the customs authorities. he, therefore, submitted that the contract price should be as mentioned in the invoice, which correctly reflected the actual value of the goods under the act, and the action of the lower authorities was justified in enhancing the same.6. it is pertinent to observe that in the same lot, which.....
Judgment:
1. Originally preferred as a revision application to the Central Government, the matter has been transferred to us as an appeal and is being disposed of as such. The present appeal is directed against the Order-in-Appeal dated 28-4-1977 passed by the Appellate Collector of Customs, Bombay.

2. For a proper appreciation of the issues involved in the present appeal, it would be useful to briefly narrate the facts of the case. A contract was entered into between The Minerals & Metals Trading Corporation of India (MMTC), hereinafter called the Buyer, and M/s.

Empresa Minera Del Peru (M1NERO-PERU), hereinafter called the Seller, and this contract is dated 6-3-1972. As per the terms of the contract, the seller was to supply to MMTC Electrolytic Copper Wire Bars corresponding to ASTM B5/43 specifications. The price clause is also relevant and is reproduced below : - The purchase price for each shipment is therefore to be understood as the monthly average of the Peruvian Producers Price for the month prior to the contracted month of shipment." 3. The present dispute relates to a consignment of 999.923 MT of the said goods shipped on 19-10-1974 and imported at Bombay port on 4-11-1974. The invoice for the goods dated 21-10-1974 showed two prices for the combined quantity of 999.23 MT. The relevant portion is quoted as below : ------------------------------------------------------------------------------- UNIT PRICE AMOUNT"500.000 M/T Stg. 474.91 Stg. 237,455.00Unit Price : LME Wirebar499.923 M/T Stg. 1,021.10 Stg. 510,471 38Unit Price : LME Wirebar------------------------------------------------------------------------------ 999.923 M/T Stg. 747,926.38"------------------------------------------------------------------------------ The price of 474.91 per MT adopted for the quantity of 500.000 MT was not accepted for assessment purposes by the lower authorities, but the price of the balance quantity of 499.923 MT was, however, accepted. For the quantity of 500.000 MT referred to earlier, the appraised value was enhanced to 630.76 per MT. This was done, as per the submissions made by the learned representative of the respondent, in accordance with the stipulations of the contract dated 6th March, 1972 i.e., with reference to the average price for the goods prevailing in September, 1974.

Aggrieved with the order of the Deputy Collector, the appellants preferred an appeal before the Appellate Collector of Customs, which was dismissed and the order of the Deputy Collector was upheld.Aggrieved by the order of the Appellate Collector, the appellants filed a revision application before the Central Government, which is now before us as an appeal.

4. Before appreciating the contentions of the parties, we would like to state here that a clarification was agreed upon between the contracting Dartres on 13th October, 1972. It was stipulated, that inter alia : - "in regard to the price, it was agreed that the average Peruvian producer's price for the month prior to the contractual month of shipment would apply to each monthly lot, irrespective of the month in which the shipment actually takes place." 5. Shri Oberoi, the learned Advocate for the appellants, has drawn our attention to the memorandum of agreement dated 27th of August, 1974, which by mutual consent between the parties, amended the contract dated 6-3-1972. It is his contention that the price of 474.91 per MT is in accordance with the terms of the contract which will come to after all the relevant documents connected therewith are added together.

According to him, therefore, the invoice price for the balance lot of 500.000 MT should have been accepted for assessment purposes, being in conformity with the provisions of Section 14 of the Customs Act. He also emphasised the fact that the appellants have no special relationship with the foreign suppliers of the goods, and all relevant documents pertaining to the transaction in 1983 were made available to the Customs authorities. He, therefore, submitted that the contract price should be as mentioned in the invoice, which correctly reflected the actual value of the goods under the Act, and the action of the lower authorities was justified in enhancing the same.

6. It is pertinent to observe that in the same lot, which had arrived by the same vessel, two prices were shown in the invoice as they related to two different periods. So far as the higher price of 1,021.10 per MT for 499.923 MT was concerned, that was accepted by the Customs authorities, but regarding the quantity of 500.000 MT, the value as indicated in the invoice was not accepted, and instead a higher price was adopted. Shri Ohri, the learned representative of the respondent, pointed out that the lower authorities were justified in enhancing the value of the 500.000 MT because under Section 14 of the Customs Act, 1962 the price has to be as prevailing at the time and place of importation. He further submitted that the price for the lot of 500.000 MT was as shown in the invoice of the appellants referred to in earlier period, and since in the meantime there had been a revised contract, the said revised contract was not binding on the lower authorities, who were therefore justified in adopting the price for 500.000 MT with reference to the average of the Peruvian Producers Price for the month of September, 1974, which worked out to 630.76 per MT. Whether the Customs authorities below could question the legality of the contract between the two parties is material for the present purpose. If the two contracting parties agreed to revise the contract on certain conditions, no third party has any right to question the terms of the contract. The price had been mentioned in accordance with the terms of the contract, which were obtaining at the time the goods were supplied and the authorities below had no power to question the validity or otherwise of the contract, more particularly when it is not a contract between private parties. Shri Ohri's contention would have some substance had there been any other contemporaneous import of the like goods at the same time. However, in the present case, there is no dispute between the two parties that at the relevant time there were no contemporaneous imports of the like goods, and therefore, the only criterion for determination of the value was the value of the goods which had been imported by the appellants.

Further, value thereof had been stipulated by virtue of a contract, the validity of which cannot be questioned.

7. Shri Ohri has drawn our attention to Tribunal's decision reported vide 1983 ECR 156 D(CEGAT) M/s Minerals & Metals Trading Corporation (India) Ltd., Madras v. The Collector of Customs, Madras = 1983 ELT 364 (CEGAT). The terms of the contract in each case have to be seen for their proper effect ; and the facts of the contract with M/s Tekassulf Inc., New York do not apply to the present case.

8. From the above discussion, we are satisfied that the authorities below were not justified in enhancing the assessable value of 500.000 MT of goods, which had come in the bigger lot. The terms of the contract have to be meticulously applied when the price had been rightly shown in the invoice. This fact is also established from the statement of the average price of Copper Wire Bars from which the figure of 630.76 MT was taken.

9. For the reasons stated above we are unable to uphold the order of the Appellate Collector, the same is set aside and the appeal is consequently allowed.


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