ORDER
Chittaranjan Satapathy, Member (T)
1. These appeals have been filed by the applicant Commissioner against the order-in-appeal passed by the lower appellate authority allowing reduction in value for customs duty determination based on the addendum to the original memorandum of agreement between the seller and the appellant-importers for purchase of the impugned vessels for scrapping. The respondents have asked for adjournment, which is declined as it is felt after hearing the learned SDR for sometime that the matter is required to be referred to a Larger Bench in view of the conflicting decisions by different co-ordinate Benches of the Tribunal.
2. The learned DR arguing on behalf of the department states that in the following orders passed by different Benches of the Tribunal, it has been held that variation in the value of the vessels through addenda to the memoranda of agreement, which reduce the value, cannot be allowed for the purposes of customs valuation: –
(i) CC, Ahmedabad v. Guru Ashish Ship Breakers .
(ii) CC, Jamnagar v. Shree Ram Steel and Rolling Industries 2005 (188) E.L.T. 30.
(iii) CC, Jamnagar v. Chaudhary Industries .
(iv) Chaudhary Ship Breakers v. CCE, Ahmedabad 2005 (191) E.L.T. 960.
3. We find that in the case of Chaudhary Ship Breakers (cited supra), it has been held that the mutual reduction of price after import of goods into India by executing an addendum to the original agreement is not acceptable as no provision regarding price variation was there in the original memorandum of agreement. In the case of Chaudhary Industries (cited supra), it has been held that the original agreement for sale did not provide for reduction in price after finding of any discrepancy therein but only provided for arbitration, which was not taken recourse to and hence addendum to the agreement reducing price cannot be accepted. In the case of Shree Ram Steel & Rolling Industries (cited supra), it has been held that once the vessel entered the territorial waters of India, importation is complete and that any reduction in price after such an event has to be scrutinized carefully and the revised price cannot be the basis for valuation which has been arrived at after the vessel was imported into the country, hence the price indicated in the first MoA is to be considered as the customs value. In the case of Guru Ashish Ship Breakers (cited supra), it has been held that no provision was there in the original agreement for reduction in price for the reasons stated under the addendum and hence price of goods, as stated in the original agreement which was available at the time of import of goods, has to be accepted as the customs value under the Customs Valuation Rules, 1988.
3. We find that there are contrary decisions of other Benches of the Tribunal where under variation in value has been allowed on the basis of addendum to the original memorandum of agreement in the following cases:
(i) CC, Ahmedabad v. Atom Manohar Ship Breakers Ltd. 2003 (156) E.L.T. 151.
(ii) Jai Jagdish Ship Breakers v. CC, Jamnagar 2004 (177) E.L.T. 928.
(iii) CCE, Rajkot v. Jai Bharat Steel Industries 2005 (192) E.L.T. 792 (Tri-Mum).
4. We find that in the case of Atom Manohar Ship Breakers (cited supra), an appeal has been admitted by the Hon’ble Supreme Court but no final decision is available. In the case of Jai Jagdish Ship Breakers (cited supra), it has been held that there was nothing on record to show that the addendum was prepared just to deny payment of duty and no survey report was available to rebut the appellants’ claim for deduction and hence the value reduced by executing the addendum to the original agreement was allowed. In the case of Jai Bharat Steel (cited sapra), it has been held that price fixed in the MoA, though ordinarily binding on the parties, the same is not inflexible and is subject to any change that parties in contract may mutually agree. It has been, further, held that reduction in price by addendum cannot be faulted as the sale was on the basis of “as is where is” clause in the agreement, and that since the parties to MoA have agreed to reduce the price in compelling circumstances to give life to the contract, the altered price is not to be discarded for customs valuation purposes.
5. The learned SDR has also pleaded that the value for sale of vessels for scrapping has been determined in the original contract in these cases on the basis of the LDT of the vessel by agreeing to a particular amount per tonne of’ LDT and hence unless there is a change in the LDT, in the absence of price variation clause in the contract, no deduction in value can be allowed since under the relevant customs law, the value at the time of importation is relevant. He also cited the decision of the Tribunal in the case of Malwi Ship Breaking Co. v. C.C. & C.E. (A), Ahmedabad , whereunder it was held that duty is to be assessed only in terms of LDT referred to in the stability book. He also refers to the Hon’ble Supreme Court’s decision in Udyani Ship Breakers Ltd. v. C.C. & C.E., Rajkot , which upholds valuation on the basis of value prevailing on the date of importation and disallows abatement of duty since the importer had not taken recourse to the provisions under Section 22 of the Customs Act, 1962. We find that the issue before the Hon’ble Supreme Court in the case of Udyani Ship Breakers (cited supra) was slightly different as the ultimate importer bought the vessel at a lower value from the original buyer and the last sale was held not to be in the course of international trade by the Hon’ble Supreme Court. Hence, the said decision is not applicable to the cases in hand where the sale is in the course of international trade.
6. We find that there are a number of decisions of different Benches of the Tribunal, which allow price variation on the basis of addenda to MoA whereas several others hold that the value as per the original MoA should be taken as the customs value as indicated above. In view of the conflict in the views expressed by the different Benches of the Tribunal, we are of the considered opinion that the matter requires to be referred to a Larger Bench to resolve the conflict. We order accordingly and place the matter before the Hon’ble President for the purpose of constituting a Larger Bench.
(Dictated and pronounced in open Court)
