JUDGMENT
H. Suresh, J.
1. The petitioners imported “copra” of Zanzibar origin under valid import licence. The shipment was invoiced by M/s. Panachand & Co. Pvt. Ltd., Singapore, under their Invoice No. 451 of 15th July, 1980. The Assistant Collector of Customs thought that the goods had been under-invoiced and, therefore, a show cause notice was issued on 23rd January, 1981. The petitioner sought to explain to the Assistant Collector of Customs stating that they have imported the goods as per the conditions contained in the import licence and on a price as agreed between themselves and the said sellers M/s. Panachand & Co. and that they had paid the sellers only the invoice value as per the contract and nothing more and, therefore, there was no question of any under-invoicing. It was pointed out that the petitioners had no interest whatsoever in the sellers and the price was the sole consideration for the transaction. However, the department proceeded totally on a wrong basis. It appears that the origin of the supply was from Zanzibar State Trading Corporation, Zanzibar. The department said that in the international trade at the material time, there were fluctuations in the price and, therefore, the goods could not have been imported at the price shown in the invoice and according to them the petitioners were liable to pay an additional duty amounting to Rs. 43,792.13 P.
2. As against the decision given by the Assistant Collector of Customs, the petitioners filed this petition, sometime in October, 1981.
3. It appears that in the meanwhile another oil company, viz., Liberty Oil Mills had imported from the same source the same goods and the department had proceeded against the said company more or less on the same basis and contended that the invoice had been under-invoiced. As against the decision by the Assistant Collector of Customs, the said Liberty Oil Mills filed an appeal before the Appellate Collector. Finally, the matter came up before the Central Board of Excise and Customs. The Board by its order dated 31st December, 1981, copy of which is annexed as Exhibit 1 to the affidavit of a partner of the petitioners dated 14th February, 1986, negatived the contention of the department and held that there was no question of under-invoicing and that the price which was required to be taken for the purpose of valuation under the Customs Tariff Act was the price at which the sellers had offered the goods for sale and accordingly the decision of the department was reversed. Mr. Gursahani appearing for the petitioners pointed out that now that the Central Board of Excise and Customs has upheld the contentions of the petitioners, the same line of reasoning should be accepted and this petition should be allowed.
4. I am inclined to agree with Mr. Gursahani. Firstly, the department has not been able to show how the price given by the seller should not be accepted. Under Section 14(1)(a) of the Customs Tariff Act, 1975 (sic), it is the price at which the seller offers the goods to the buyer, that will have to be taken into account, unless the department can show that the buyer has some interest in the business of the seller and the price is not the sole consideration for the sale or offer of sale. In the case of Liberty Oil Mills, the Board correctly analysed the legal position and came to the conclusion that the buyer and the seller had no interest in the business of each other and that the price was the sole consideration for the same and that that was the price which was agreed upon in the course of international trade. So also in the present case the price given by the seller, viz., Panachand & Co. should be accepted as the sale price for the purpose of sale of these goods and there is nothing to show that there is any interest in the business of each other. The petitioners had, in fact, contended that under the terms and conditions of the licence it was not open to the petitioners to vary the price and, therefore, the price had been agreed upon and on the basis thereof the licence had been taken.
5. Therefore, the department was clearly in the wrong when it proceeded on the basis that there was an under-invoicing in the import of these goods. The petitioners must, therefore, succeed in this petition. I, therefore, pass the following order :
Order
6. Rule made absolute in terms of prayers (a) and (b) of the petition. The Bank Guarantee given by the petitioners do stand discharged. No order as to costs.
