Page 209 - ELT_15th August 2020_Vol 373_Part 4

2020 ] IFFCO LTD. v. PRINCIPAL COMMISSIONER OF CUSTOMS, JAMNAGAR 543

31. What further needs to be noticed is that under 10(1)(e) of the 2007
Rules, all other payments can be added to the transaction value if they are actual-
ly made or to be made as a condition of sale of the imported goods, by the buyer to
the seller, or by the buyer to the third party to satisfy an obligation of the seller to
the extent that such payments are not included in the price actually paid or pay-
able. Since the aforesaid payment of Rs. 17/- per MT has not been made as a
condition of sale of urea by the Government of India to the Appellant to satisfy
an obligation of the Government of India, this amount cannot be added to the
transaction value under Rule 10(1)(e) of the 2007 Rules.
Addition of 2% Notional High Sea Sale Commission
32. The finding recorded by the Principal Commissioner on this issue is
as follows :
“13.6 The second issue to be decided is whether high sea sale commis-
sion of 2% is to be added in the assessable value or not. It has seen argued
that in terms of Circular No. 32/2004-Cus., dated 1-5-2004, the actual high
sea sale contract price paid by the last buyer would constitute the transac-
tion value under Rule 4 of CVR, 1988 and inclusion of commission on no-
tional basis may not be appropriate. The Board has not approved the
Mumbai Custom House practice of adding 2% notional High Sale Commis-
sion in CIF value.
… … …
13.8 From the above analysis, it is clear that high sale commission is in-
cludable in the assessable value. The question is whether, the price at which
the high sea sale is taking place between GOI and IFFCO can be considered
as price at which international transfer of goods is taking place. In other
words, can this price be considered as the transaction value in terms of Rule
4 or not. As already mentioned above, the price said by the GOI to IFFCO is
pool price (i.e. approx. US $ 83 per MT) and that the price paid by STE to
exporter i.e. US $ 300 per MT. The pool price is an artificial price at which
IFFCO sells goods further after clearance from Customs to the farmers. As this is
not the price at which the international transfer of goods has taken place, the same
cannot be the assessable value in terms of the circular. In the instant case, as al-
ready analyzed above, there are two transactions involved. One is between
STE and GOI and another is between GOI and IFFCO. The first high sea
sale between STE and GOI is an international transfer of goods. I have al-
ready held that the service charges paid by GOI to STE are includable as-
sessable value. There cannot be any doubt that the price at which GOI
transfers goods to IFFCO cannot be accepted as transaction value. This is
also the reason that IFFCO is paying duty on the price at which the goods
are transferred by STE to GOI. In normal course of trade, a person selling the
goods on high sea sale basis, would naturally add some commission to cover his ex-
penses and margin in the deal with high sea sale buyer. However, in the present
case, no data regarding expenses incurred by GOI (apart from declared value of the
imported goods) is available as the goods have been sold at an artificial price to
IFFCO. Therefore, one has to go for best judgment method prescribed in Rule 9 of
CVR, 2007. It is established practice that where data regarding actual commission
is not available, 2% high sea sale commission is to be added to arrive at the correct
assessable value of the imported goods.”
(emphasis supplied)

EXCISE LAW TIMES  15th August 2020  209