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[dot]T[dot][at]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[dot]T[dot][at]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 20th August and 15th 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 LEFT (S)
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.