2005 (182) E.L.T. 429 (Tri.- Mumbai)

 

IN THE CASTAT, WEST ZONAL BENCH, MUMBAI

Smt Archana Wadhwa, Member (j) and Shri S.S. Sekhon, Member (T)

 

COMMR. OF CUS. (PREV.), JAMNAGAR

Versus

GUJARAT SHIP TRADING CORPORATION

Order Nos, A/901-902/2004-WZB/C-11, dated 6-10-2004 in Appeal Nos. C/293-294/2004

 

     Valuation (Customs) – Ship sold for export and breaking in India-Price paid by foreign buyer to owner to ship is the basis of valuation and not the one agreed between former and Indian importer – Reduction from this price for buying commission paid to foreign buyer cannot be allowed- Rule4 of Customs (Valuation) Rules, 1988- Section14 of Customs Act, 1962. [(para 2(d), (e)and2(f)]

Appeals allowed

CASE CITED

Sai Baba Ship Breakers- Order No. CI/680-681-WZB/2000,dated 14.2.2000 -Relied on…..[Para2(d)]  ,

 

            REPRESENTED BY, for the Respondent:     Shri R.B. Pardeshi, JDR, for the Appellant 

                                                                         None, for the Respondent.

            {Order.S. Sekhon, Member (T). –After hearing the Id. DR,a common order is being passed in these appeals since the  issue involved is the same.

 

2.                After hearing Id. DR and considering the written reply on record, we proceed to

decide the matter. It is found-

(a)            These appeals have been filed by the Revenue and facts herein, have been taken from the case C209 for reference.  The facts in brief are, the respondents presented Bills of Entry on 11-9—2004 for clearance of vessel imported for breaking at port alang district Bavnagar Gujarat.  Value for duty purpose was declared at US$7,465.55 L.T.@US$167.00/LDT on the basis  of a MOA dated 5-9-2000 with M/S cane Shipping and Trading S.A.Liberia they (hereinafter refered, the second MOA) & the Respondents. The respondents importers bill was assessed finally on 15-10-2001. The Revenue filed on appeal to commissioner (Appeals) Customs Ahmedabad to consider  the purchase price of the vessel as US$12,80,341.80 for 7,465.55 L.T.@US$171.50/L.T.as per MOA dated 17-8-2000 entered into between M/s. Wild Shipping  Ltd.  Malta the owner of the vessel and M/S. Cane Shipping and Trading S.A. Liberia the buyer of the vessel as the transaction value, for the vessel as the same was offered effective referred to as price MOA) at the time of its importation into India.

(b)            Clause 12 of the impugned order-in-appeal observed that the first MOA i.e 17-8-2000, satisfies the requirement of Section d14 fof the Customs Act as  well as Rule 4 of Customs Valuation (Determination of prices of Imported Goods) Rules, 1988.  The values mentioned therein has to be considered as assessable value, unless the importer justifies the reduction in price based of evidence, in accordance with second MOA.

(c)             At Clause 13 of the impugned Order- in- Appeal it has been observed that “the important point to be noted is the MOA will be considered as an invoice only when it clarifies that the vessel has been sold for export to India.

MOA dated 17-8-2000 between Wild Shipping they seller was and Cane Shipping and Trading S.A. Liberia they bear order at para 11 rules as follows.

Now whereas AT para 1 of the MOA dated 17-8-2000 reads as,

“Wild Shipping Ltd of Valetta Malta (thereinafter called the sellers) have today sold and Cane Shipping and Trading S.A, 80 Board St. Monrovia, Liberia (thereinafter called the buyer) have today bought for demolition the bulk carrier ‘Prime’………….with light displacement of 7585 MT- 7465.55 LT………..with all her available outfit anchor and chains ………..Excluding master, officiers and

crews personal effects company log books stationery forms…………And items stated in Clause 13 hereunder at    port official outer anchorage at west coast India (Alang)………………

                            Further as per clause 3 of the said MOA read as:

                           “The vessel shall be physically delivered ‘AS IS WHERE IS’ and taken

oversafely afloat, substantially intact, under her own power free of cargo, free of charter, free of fire  damage, free of permanent ballast, with all holds  empty and hatches closed.  No removals expect as stated hereunder in clause d13 with main engine/ all generators in working condition at port of delivery outer anchorage at Alang in India…………….The vessel shall be delivered between 20^th August and 15^th September 2000.”

(d)            The said vessel arrived at Alang anchorage on 2-9-2000, the same was boarded on 4-9-2000 and the Entry Inward was granted on 8-9-2000. Thus, the vessel was delivered, at safe outer anchorage port Alang, India. Therefore it is clear that the said vessel was sold to M/S Cane Shipping and Trading SA vide first MOA dated 17-8-2000 for export and delivery port Alang India. M/S Royal Shipping show the vessel to M/S Cane Shipping and Trading SA vide first MOA dated 17-8-2000 at USD 1280341,80 and this vessel was imported in India on 2-9-2000 for delivery at that price therefore the finding of the Commissioner in clause 14 of the impugned order that in MOA dated 17-8-2000 entered between Wild Shipping Ltd. and Cane Shipping and Trading SA does not show  that the vessel was sold for export in India is not proper and legal as the same was not  based on facts .  The price of US$1280341.80 at which the vessel was sold wide MOA 17-8-2000, should be the transaction value as per Rule 4 of the Customs Valuation Rules, 1988. In the case of Sai Baba Ship Breakers wide CI/ 680-81-WZB/2000, dated 14-2-2000 it was held by the Tribunal that price reduction after importation vessel in India cannot be considered.

In the instant case, description of the vessel in both the MOA are same which are reproduced below:

MOA dated 17-8-2000 entered into between M/s Wild Shipping Ltd.

 and M/S. Cane Shipping and Trading S.A shows the vessel description as

 under:

 

20. The vessel is described as follows            :

NAME OF VESSEL                                  :  MV PRIME

EX-NAMES:       PERCA    1,                       :

ORCA,LENINSK, LITA

TYPE OF VESSEL                          :  BULK CARRIER

DEAD WEIGHT                               :  34995MT

BUILT                                                         :  1975, ASTILLROS  ESPANOLES

                                                                     SA, FACTORIA DE

SEVILLA, SPAIN                                         :

FLAG                                                          :  MALTA

PORT OF REGISTRY                                   :  VALLETTA

GT/NT                                                         :  19309/11429

LENGTH                                                     :  185.93M

BREADTH                                                   :  24.20M

DEPTH                                                       :  15.20M

MAIN ENGINE                                             :  ONE, MANISES-SULZER-SPAIN

                                                                     DIESEL ENG NO.

(310) MODEL                                              :  7RND68, REAVOLUTION PER MIN

   150, BHP11550

                  AESA SULZER                                            :  THREE, WARTSLA-VISA-

                  GENERATING SETS                                    :  FINLAND

                  TYPE 424 TS SPEC                                    :  11040,BHP:540,RPM:720

                  WORKING PROPELLER                              :  NO

                  SPARETAILSHAFT                          :  YES

                  LIGHT WEIGHT                                           :  7585METARIC TONS/7465.55

                                                                                       LONGTONS

                   SPARE ANCHOR                           :  YES

                   CONSTRUCTION                            :  STEEL

                   BALLAST TANKS                           :  FORE PEAK/ AFT PEADOUBLE

                   BOTTOM/TOP                                            :

 

 SIDE ALTHOUHGH TO THE BEST OF THE SELLERS KNOWLEDGE THE

 BALLAST TANKS ABOVE  WERE INITIALY COATED THE SELLERS HAVE TO

 EVIDENCE OF SAME AND CAN GIVE NO GUARANTEE AS TO WHETHER

THERE ARE ANY TRACES OR VISIBLE SIGNS OF COATING(S) LEFT

 

SINGLE SKIN                                              :  YES

TRADING HISTORY                         :  LAST 7 CARGOES, BULK BARLEY,

                                                                    COAL,ROCK PHOSPHATE,BAGGED

                                                                    RICE,WHEAT IN BULK,YELOW

                                                                    CORN,SBM+SORGHUMS.”

 

As per MOA dated 5-9-2000 entered into between M/S Cane Shipping and trading S.A and M/S Gujarat, Ship Trade Corporation, plot No. 12, Alang, the vessel’s description reads as follows:

 

TYPE                                                          :  BULK CARRIER

NAME                                                         :  MV PRIME

EX “  PERCA  1”  EX                                    : 

“ORCA”

GRT/NRT                                                    : 19309/11429 TONS

BULT                                                          :  1975/SPAIN

FLAG                                                          :  UAE

LOA X BEAM                                              :  196.00 X 24.20 METERS

LDT                                                            :  7585 MTI.E 7465.55 LONG TONS

MAIN ENGINE                                             :  SULZER 7REND68 ABT 11550 BHP

MAIN GENERATORS 3                                :

X WARTSILA 525 KVA

EMERGENCY                                             :  1 X CATTER [ O;;ER.ABT 120 HP

GENERATOR

WORKING                                      :  NONE

PAROPELLER

SPARE PROPELLER                                  :  NONE

SPARE TAIL SHAFT                                    :  YES –ONE

BALLAST TANKS                                        :  FORE PEAK /AFT PEAK/DOUBLE

                 

BOTTOM TOPSIDE, ALTHOUGH TO THE BEST OF THE SELLERS KNOWLEDGE

THE BALLAST TANKS ABOVE  WERE INITIALLY COATED. THE SELLERS HAVE NO EVIDENCE OF THE SAME AND CAN GIIVE NO GUARANTEE. AS TO       WHETHER THERE ARE ANY TRACES OR VISIBLE SIGNS OF COATINGS (S)

      LEFT

     

      LAST CARGOES                                      :  BULK BARELY,COAL ROCK

      PHOSPHATE, BAGGED RICE, WHEAT IN BULK, YELLOW ,SBM+SORGHUMS.

 

(e)            On a combined reading of the two MOAs it is seen there was no change found in the vessel, for sale by the MOA.  Hence transaction value of US dollars which was offered of sale delivery Alang India as per the said first MOA dated 17-8-2000 should be a assessable value declared by the respondents was not tenable.  The Commoissioners Customs (Appeals) has erred in considering 3% buying commission to M/S Cane Shipping and Trading S.A. the buyer, In the price offered in the MOA dated 17-8-2000 and accordingly approved the reduction.  Such a reduction is not permitable under Customs Valuation Rules.

(f)              We find sufficient force In the submissions made by  Revenue for setting aside the order of lower authorities as we do not find any reason to reduce the value for the goods, which for sale of delivery at port Alang as per original MOA dated 17-8-2000.

3.      In view of the findings, the orders are set aside and Revenue appeal allowed  after setting aside the order of the lower authority.