COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM versus M/S AGGARWAL INDUSTRIES LTD.

Citation: [2011] 12 S.C.R. 1128 · Decided: 17-10-2011 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Dismissed
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Judgment (excerpt)

A 
B 
[2011] 12 S.C.R. 1128 
COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM 
V. 
MIS AGGARWAL INDUSTRIES LTD. 
(Civil Appeal No. 2521 of 2006) 
OCTOBER 17, 2011 
[D.K. JAIN AND SUDHANSU JYOTI MUKHOPADHAYA, 
JJ.] 
CUSTOMS VALUATION (DETERMINATION OF 
.:; PRICE OF IMPORTED GOODS) RULES, 1988: 
Rules 2(1)(f), 4(1)(2) and 10- Transaction value - Import 
of crude sunflower seed oil - Contract entered into 26.6.2001 
- Actual shipment taking place on 5. 8. 2001 - Meanwhile 
D increase in price of imported goods - Assessees filing 
documents as per contract price - Revenue rejecting the 
contract price and demanding customs duty as per 
contemporary invoice price on which c ther importers entered 
into contract for supply of same item either with same 
suppliers or with other suppliers in the same country - Held : 
E Section 14(1) read with r. 4 provides that the price paid by the 
importer in the ordinary course of commerce shall be taken 
to be the value in the absence of any special circumstances 
indicated in s.14(1) - Therefore, what should be accepted as 
the value for the purpose of assessment is the price actually 
F paid for the particular transaction, unless the price is 
unacceptable for the reasons set out in r.4(2) - In the instant 
case, though the commodity involved had volatile fluctuations 
in its price in the international market but having delayed the 
shipment, the suppliers did not increase the price of the 
G commodity even after the increase in its price in the 
international market - Therefore, the revenue was not justified 
in rejecting the transaction value declared by the respondents 
in the invoices submitted by them- Customs Act, 1962- s.14. 
H 
1128 
COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM 1129 
v. AGGARWAL INDUSTRIES LTD. 
WORDS AND PHRASES: 
Expressions 'ordinarily' and 'reason to doubt' -
Connotation of. 
A 
On 26.6.2001, the respondent in C.A.No.2521 of 2006 
entered into a contract with foreign suppliers for import 
B 
of 500 Metric tons of crude sunflower seed oil at the rate 
of US $ 435 CIF/Metric ton. The goods were actually 
shipped on 5.8.2001. A demand letter under r.10A of the 
Customs Valuation (Determination of Price of Imported 
Goods) Rules, 1988 (CVR, 1988) was issued to the C 
respondent stating that when actual shipment took place, 
after the expiry of the original shipment period, the 
international market price of crude sunflower seed oil had 
increased drastically and, therefore, the contract price 
could not be accepted as the 'transaction value' in terms 
D 
of r. 4 of CVR 1988. The Adjudicating Authority confirmed 
the demand and ordered the respondent to pay the 
differential amount of duty. The respondent's appeal was 
dismissed by the Commissioner (Appeals). However, the 
Tribunal held that there was no basis for demand of E 
differential duty by ignoring the invoice price. Aggrieve~, 
the revenue filed the appeal. The other appeals were also 
filed in the similar facts and circumstances. 
Dismissing the appeals, the Court 
HELD: 1.1 According to s.14(1) of the Customs Act, 
1962 the assessment of duty is to be made on the value 
F 
of the goods. The value may be fixed by the Central 
Government u/s 14(2). Where the value is not so fixed it 
has to be decided u/s 14(1). The value, according to G 
s.14(1), shall be deemed to be the price at which such or 
like goods are ordinarily sold or offered for sale, for 
delivery at the time and place and importation in the 
course of international trade. The word "ordinarily" 
implies the exclusion of special circumstances. This 
H 
1130 
SUPREME COURT REPORTS 
[2011] 12 S.C.R. 
A position is clarified by the last sentence ins. 14(1) which 
describes an "ordinary" sale as one where the seller or 
the buyer have no interest in the business of each other 
and price is the sole consideration for the sale or offer 
for sale. Therefore, when the conditions regarding time, 
B place and absence of special circumstances stand 
fulfilled, the price of imported goods shall be decided u/ 
s 14(1A) read with the Rules framed thereunder. The said 
Rules are CVR 1988. [para 12] [1141-E-H; 1142-A-B] 
C 
Eicher Tractors Ltd., Haryana Vs. Commissioner of 
Customs, Mumbai 2000 ( 4) Suppl. SCR 597 = 2000 (122) 
E.L. T. 321 (SC): 2001 ( 1 ) SCC 315; Commissioner of 
Customs (Gen), Mumbai Vs. Abdulla Koyloth 2010 (13 ) 
SCR 280 = (2010) 13 sec 473 - relied on. 
D 
1.2 According to r. 2(1 )(f) of CVR 1988, "transaction 
value" means the value determined
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