MIRAH EXPORTS PVT. LTD. versus COLLECTOR OF CUSTOMS

Citation: [1998] 1 S.C.R. 580 · Decided: 04-02-1998 · Supreme Court of India · Bench: S.C. AGRAWAL · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
MIRAH EXPORTS PVT. LTD. 
v. 
COLLECTOR OF CUSTOMS 
! 
FEBRUARY 4, 1998 
B 
[S.C. AGRAWAL AND G.T. NANAVATI, JJ.] 
-..J, ....
Customs Act 1962, Ss. 14, lll(d), (m) 112 r!w Imports & Exports 
(Control) Act 1947, S. 3 (2)-Appellants importing ball bearings in bulk 
c 
quantities at discounts averaging 5 0% of those mentioned in price list of 
manufacturer-Authorities issuing show cause notices to appellants for 
undervaluation of imports cleared on the basis of invoice value-Appellants 
producing evidence to show that discount price was the normal invoice price 
for a number of unconnected importers-Additional Collector in 1985 
accepting explanation and holding charges not proved-Department 
D appealing to Tribunal-Meanwhile in another set of show cause notices 
Collector passing orders in 1986 and I 987 rejecting invoice value and 
holding discount in excess of 20% of price list inadmissible-Appellants 
>-
appealing to Tribunal against later orders-All appeals disposed of by 
Tribunal directing authorities to fix value as mentioned in price list less 
E 
20%-Held, on facts, prices mentioned in the invoices for imports of ball 
bearings shall be treated as value for purpose of assessment of customs duty 
under s. 14. 
The appellant in one appeal, ME, imported 15 lakh pieces of ball 
bearings from SKF, Italy/Germany, after negotiating with PBT who were the 
F canvassers for S, the other appellant. Pursuant to raids carried out in the 
offices of S, the authorities served show cause notice in May, 1984 on the 
appellants for misdeclaration of the value of the imported consignments and 
consequently becoming liable to action under s. 111 (m), (d) and 112: of the 
Customs Act, 1962 (Act) read withs. 3(2) of the Imports & Exports (Control) 
G 
Ad, 1947. The said show cause notice was based primarily on the price list 
for the year 1981-82 that was furnished by the Central Office of the Overseas 
Suppliers to S, and recovered during the search, since the invoice value of 
the goods imported by ME was 48.7% of the prices mentioned in tllle said 
price list. 
~-
H 
The Additional Collector of Customs by an order in April, 1985 
discharged the notice and directed that the consignments in question be 
580 
MIRAH EXPORTS v. COLLEC. OF CUSTOMS 
581 
assessed on their invoice value. The department then appealed to the Tribunal. A 
' 
T 
Meanwhile, in regard to subsequent imports of ball bearings by S, 
separate show cause notices were issued and orders were passed in December, 
1986 and March, 1987 by the Collector who proceeded on the basis that the 
price list did not show any discount sc,hedule and that the prices with the 
discount upto 20% was discretionary and that any price which was less by B 
.>.- ,... 
more than 20% of the price indicated in the list price cannot be admissible 
while determining the assessable value under Section 14 of the Act. The 
Collector held that for arriving at the assessable value under s. 14 of the 
Act, prices indicated in the price list would be taken as the base and discount 
upto 20% of the price list, depending on the quantity would be allowed. The c 
appellants appealed to the Tribuna!. 
Dismissing the appeals of the appellants and allowing those of the 
Department, the Tribunal directed the authorities to fix the value as mentioned 
in price list of February, 1981 less 20% discount. 
D 
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In this Court, the appellants contended that the Tribunal had not taken 
note of the documents referred to by the Additional Collector of Customs in 
his order of April, 1985 which showed that other importers had been given 
50% to 70% discount over the list price by SKF. The department supported 
the Tribunal's finding that the invoice price had to be ignored in view of the 
price list. 
E 
Allowing the appeals, this Court 
HELD : 1.1. The invoice prices as mentioned in the invoices for the 
imports of ball bearings by the appellants shall be treated as the value for 
F 
the purpose of assessment of customs duty under s. 14 of the Act. (592-E] 
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1.2. The prices mentioned in the invo1ces could be treated as the price 
at which the goods were ordinarily sold in the course of international trade 
and that it had been rightly accepted as the value for assessment purposes 
under s.14 of the Act by the Additional Collector of Customs. Neither had 
it been alleged nor had any material been produced to show that ME and the G 
foreign suppliers had any interest in the business of each other. There was 
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