Page 210 - ELT_15th August 2020_Vol 373_Part 4

544 EXCISE LAW TIMES [ Vol. 373

33. In this connection, the Circular dated 11th May, 2004 issued by
C.B.E. & C. has been referred to by the Principal Commissioner. On an analysis
of the said Circular, a finding has been recorded that High Sea Sale commission
has to be included in the assessable value and the only issue that needed to be
decided was whether the price at which the High Sea Sale was taking place be-
tween the Government of India and the Appellant could be considered as a price
at which international transfer of goods was taking place in terms of Rule 4. The
Principal Commissioner noticed that the price paid by Appellant to the Govern-
ment of India was a pool price of US $ 83 per MT, whereas the price paid by the
STE to the exporter was US $ 300 Per MT. The pool price, therefore, was an artifi-
cial price at which the Appellant sold the goods to the farmers. Thus, this was
not the price at which international transfer of goods took place and the same,
therefore, could not be the assessable value in terms of the Circular. Thus, the
price at which the Government of India transfers the goods to the Appellant can-
not be accepted as ‘transaction value’, more particularly when in the normal
course of trade a person selling the goods on High Sea Sale basis would naturally
add some commission to cover his expenses. However, as there was no data re-
garding expenses incurred by the Government of India as the goods were sold
on an artificial price to the Appellant, the best judgment method as prescribed in
Rule 9 of the 2007 Valuation Rules was required to be adopted and it was an es-
tablished practice that when actual data regarding commission was not available,
2% High Sea Sale Commission could be added to arrive at the correct assessable
value of the imported goods.
34. Learned Consultant for the Appellant has stated that this 2% No-
tional High Sea Sale Commission is being added to the assessable value only at
Pipavav Port which is the port involved in the present appeal, but this notional
Commission is not being added at Mundra and Kakinada Port where also urea is
imported by the Appellant. It has also been pointed out that even in the case of
two importers, namely M/s. Koramandal International Ltd. and M/s. Kribhco,
when urea is imported from Hazira Port, this notional Commission is not added.
In support of this contention, Bills of Entry of the importers have also been en-
closed.
35. The Circular, on which reliance has been placed in the show cause
notice and the order of the Principal Commissioner, is reproduced below :
“Circular No. 32/2004-Cus., dated 11-5-2004
Subject : Customs Valuation Rules, 1988 - Determination of assessable value for
goods sold on high seas - Regarding.
Representations have been received on the Ministry to clarify the manner of
determining the value of imported goods imported on high-sea-sales basis.
As per the existing practice in Mumbai Customs House, the “high-sea-sale-
charges” are added to the declared CIF value in terms of Public Notice No.
145/2002, dated 3-12-2002. Such “high-seas-sales-charges” are taken to be
2% of the CIF value as a general practice. In case the actual high-sea-sale
Contract price is more than “the CIF value plus 2%”, then the “actual Con-
tract price” paid by the last buyer is being taken as the value for the pur-
pose of assessment. In some of the custom houses, however, audit has
raised objection stating that if, in a particular transaction, there were about
three/four high-sea-sales, then high-sea-sales Service Charges @ 2% has to
be added to the CIF value, for each such transaction.

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