ORDER
V.P. Gulati, Vice President
1. The issue in the appeal relates to the valuation of the goods under Section 14(1) of the Customs Act. The appellants seek the acceptance of the invoice value while the revenue has adopted the import price of contemporaneous imports made by a Government of India undertaking for similar quantity. The learned lower appellate authority, based on a certificate of the suppliers that has been produced by the appellants, has allowed a quantity discount of 6.5% over the price at which the goods were invoiced in the other import.
2. The learned Advocate for the appellants has pleaded that the appellants have complied with all the requirements for acceptance of the transaction value in terms of Section 14(1) read with Rule 4 of the Valuation Rules. He has pleaded, unless in law the appellant’s transaction value could be discarded, a resort could not be had to Rule 5 of the Valuation Rules. He has pleaded, in the present case the appellant’s representative had negotiations abroad with the suppliers and, thereafter, an agreed price was arrived at and the goods were supplied at that price to them. He has in this connection referred us to a certificate from the suppliers which was obtained from them after the customs authorities had raised objection and in which the suppliers have stated as under:
This is to certify that we are the exclusive distributors to India for Winchester Disk Drives manufactured by Maxtor Corporation Incorporated, San Jose, U.S.A.
The pricing of Disk Drives is uniform and standard throughout the International markets, but various discounts are offered to different buyers purely based on terms like exclusive standardisation, bulk offtake and special payment terms.
Consequently, Wipro Information Technology Limited, Bangalore have been given a discounted price based on about 5% (Five percent) general trade discount, 3.5% discount for special Letter of Credit payment terms and another 6.5% discount based on bulk offtake commitment.
3. He has referred us to their another certificate dated 13th June, 1989, wherein the following has been stated :
This is to certify that we are the local liaison office of Silicon Electronics, Santa Clara, U.S.A., who in turn are the authorised distributors to India for Maxtor Corporation Inc., San Jose, U.S.A. for their Winchester Disk Drives.
We wish to state here that the price of 380 MB SCSI Drives being charged to M/s. Wipro Information Technology Ltd., namely US $ 1540.00 (US Dollars one thousand five hundred forty only) has been arrived at after several negotiations between Maxtor Corporation. U.S.A. and Wipro Information Technology Ltd., India and this is the rock bottom price based on bulk offtake and special payment terms etc.
Wipro Information Technology Ltd., were the first and largest buyers of 380 MB & 760 MB Drives for us in India and their offtake figures are also very large compared to other sporadic buyers who buy up to 5/20 drives per annum (whereas Wipro buys them in hundreds per order).
We have therefore been supplying Maxtor Winchester Disk Drives to Wipro at extremely competitive prices, keeping very low margins for our operations, in view of standardisation by this one of the largest buyers in India.
4. He has pleaded that the price was a negotiated one and, therefore, should have been accepted for assessment under Section 14(1) of the Customs Act.
5. The learned JDR has pleaded that in terms of the supplier’s certificate it has been clearly stated that the suppliers have a uniform standard price throughout the international market but they offered discounts to different buyers based on terms like exclusive standardisation, bulk offtake and special payment terms. He has pleaded in this background there should have been some negotiations for arriving at the price at which the goods had been supplied to the appellants. He has pleaded that no evidence has been produced regarding standard price applicable for the international market and the reasons for which various discounts have been offered. In view of this he has pleaded, since the appellants had personal negotiations with the suppliers and no basis as such has been laid for the goods having been sold to the appellants at the price at which the same were invoiced as per the sales in the course of international trade, it has to be held that this was a special price which was given to the appellants and the same, therefore, is not acceptable.
6. We have considered the pleas made by both the sides. We observe that no correspondence or any other evidence has been produced before us to show that the price at which the goods had been invoiced was based on certain rationale which was available during the course of international trade to the other buyers. We observe while Rule 4 of the Valuation Rules ordains that transaction value should be accepted unless, of course, it does not satisfy the parameters laid down under this rule. We observe that Rule 4 has to be read with provisions of Section 14(1) and what Section 14(1) states is that the price should be such at which the goods in the ordinary course of international trade can be imported at the price at the place of importation. For a price to be accepted, therefore, it has to be shown that this was the price which was obtained during the course of international trade. On the appellants’ own showing, the suppliers have an international price and they give various discounts for the considerations which have been set out in the certificate produced before us. No evidence has been produced that the reduced price at which the appellants had imported the goods was for considerations as available in the course of the international trade. International price as such has not been produced nor the basis of the various discounts as per this price brought on record. In this background, therefore, it has to be held that the appellant had not satisfied the parameters as set out in Section 14(1) read with Rule 4 of Valuation Rules. If that be so, the transaction value as such cannot be accepted.
7. If Rule 4 value is not acceptable, then the question would be, what would be the basis for the same. We observe that the department has come on record that a contemporaneous evidence of the import of the very same goods by a Government of India Undertaking at prices which are higher than the price at which the appellants have imported the goods. The plea of the appellants is that they are bulk buyers of the goods. The learned lower authority has taken note of this fact and based on the certificate which the suppliers have given to the appellants, he has allowed a discount of 6.5% for this reason. This discount, therefore, can be taken to take care of the appellants purchase of the goods in larger quantities over a period than the one, the other importer had purchased. There is no other evidence before us to allow further reduction in regard to the price. The number of pieces as it is imported by the appellants almost correspond to the number of the other import, but the learned lower appellate authority has taken note of the imports over a period of time while allowing the discount.
8. In view of the above, we hold that there is no infirmity in the order of the learned lower appellate authority and we uphold the same.
9. The appeal is, therefore, dismissed.