COMMISSIONER OF CUSTOMS, VISHAKHAPATNAMversusM/S AGGARWAL INDUSTRIES LTD.

                       [2011] 12 S.C.R. 1128


A     COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM
                                   V.
                MIS AGGARWAL INDUSTRIES LTD.
                  (Civil Appeal No. 2521 of 2006)
                         OCTOBER 17, 2011
B
    [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:                                        A
   Expressions 'ordinarily' and 'reason to doubt' -
Connotation of.

      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
                                                              F
     HELD: 1.1 According to s.14(1) of the Customs Act,
1962 the assessment of duty is to be made on the value
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 in accordance with
    r.4 thereof. [para 1O] [1138-F]

       1.3 In Eicher Tractors Ltd, it has been held that in
E cases where the circumstances mentioned in rr.4(2)(c) to
  (h) are not applicable, the Department is bound to assess
  the duty under transaction value. Therefore, unless the
  price actually paid for a particular transaction falls within
  the exceptions mentioned in rr.4(2)(c) to (h), the
  Department is bound to assess the duty on the
F transaction value. It was further held that r.4 is directly
  relatable to s.14(1) of the Act. [para 12] [1142-B-C]

      1.4 Section 14(1) read with r.4 provides that the price
  paid by the importer in the ordinary course of commerce
G 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 paid for the particular
  transaction, unless the price is unacceptable for the
H reasons set out in r.4(2). [para 12] [1142-C-E]
COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM1131
       v. AGGARWAL INDUSTRIES LTD.
    Rabindra Chandra Paul Vs. Commissioner of Customs          A
(Preventive), Shillong 2007 (3) SCR 319 = (2007) 3 SCC 93
- relied on.
     1.5 Nevertheless, if on the basis of some
contemporaneous evidence, the revenue is able to
demonstrate that the invoice does not reflect the correct      B
price, it would be justified in rejecting the invoice price
and determine the transaction value in accordance with
the procedure laid down in CVR 1988. Before rejecting
the transaction value declared by the importer as
incorrect or unacceptable, the revenue has to bring on         C
record cogent material to show that contemporaneous
imports, which obviously would include the date of
contract, the time and place of importation etc., were at a
higher price. In such a situation, r.1 OA of CVR 1988
contemplates that where the department has a 'reason to        D
doubt' the truth or accuracy of the declared value, it may
ask the importer to provide further explanation to the
effect that the declared value represents the total amount
actually paid or payable for the imported goods. [para 11]
[1140-E-H; 1141-A]                                             E
     1.6 However, 'reason to doubt' does not mean
'reason to suspect'. A mere suspicion upon the
correctness of the invoice produced by an importer is not
sufficient to reject it as evidence of the value of imported
goods. The doubt held by the officer concerned has to          F
be based on some material evidence and is not to be
formed on a mere suspicion or speculation. Although
strict rules of evidence do not apply to adjudication
proceedings under the Act, yet the Adjudicating Authority
has to examine the probative value of the documents on         G
which reliance is sought to be placed by the revenue. It
is well settled that the onus to prove under-valuation is
on the revenue but once the revenue discharges the
burden of proof by producing evidence of
contemporaneous imports at a higher price, the onus            H
    1132    SUPREME COURT REPORTS             [2011] 12 S.C.R.

A shifts to the importer to establish that the price indicated
  in the invoice relied upon by him is correct. [para 11]
  [1141-A-D]
        1.7 In the instant case, the whole controversy arose
   on account of difference in price of the same commodity,
B contracted to be supplied under different contracts
  entered into at different points in time. Admittedly, the
   contract for supply of crude sunflower seed oil @ US $
  435 CIF/PMT was entered into on 26.6.2001. It could not
   be performed on time because of which extension of time
C for shipment was agreed to between the contracting
   parties. It is true that the commodity involved had volatile
  fluctuations in its price in the international market but
  having delayed the shipment, the supplier did not
   increase the price of the commodity even after the
D increase in its price in the international market. This fact
  is also proved by the actual amount paid to the supplier.
  There is no allegation of the supplier and importer being
  in collusion. It is also not the case of the revenue that the
  transaction entered into by the respondent was under-
E valued or was not genuine. Nor was there a
  misdescription of the goods imported. It is also not the
  case of the revenue that the subject imports fell within
  any of the situations enumerated in r.4(2) of CVR 1988.
  The import instances relied upon by the revenue could
F not be treated as instances indicating contemporaneous
  value of the goods becaus·e contracts for supply of the
  goods in those cases were entered into almost after a
  month from the date of contract in the instant cases, more
  so, when admittedly there were drastic fluctuations in the
G international price of the commodity involved. [para 13]
  [1142-F-H; 1143-A-C-D-F]
      1.8 This Court is, therefore, of the opinion that the
  revenue was not justified in rejecting the transaction
  value declared by the respondents in the invoices
H submitted by them. [para 13] [1143-FJ
COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM1133
       v. AGGARWAL INDUSTRIES LTD.
                       Case Law Reference:                       A
    2000 ( 4 ) Suppl. SCR 597 relied on              para 6
    2010 (13 ) SCR 280             relied on         para 8

                   .
    2007 (3 ) SCR 319              relied on         para 12     B
    CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2521 of 2006.

    From the Judgment and Order dted 04.08.2005 of the
Customs, Excise & Service Tax Appellate Tribunal, South Zonal    c
Bench in Appeal No. C/139/02.
                           WITH
Civil Appeal Nos. 1699, 2129, 2114, 2518, 2519, 2520, 2522,
2523, 2853, 3197, 3487, 3564 of 2006 and 5006 of 2007
     R.P. Bhatt, Shyam Divan, Shipra Ghose, Binu Tamta, B,       D
Krishna Prasad, P. Parmeswaran, V.K. Verma. Pramod B.
Agarwala, Praveena Gautam, Anuj P. Agarwala, Kailash
Pandey, Ranjeet Singh, K.V. Shreekumar, M. Gireesh Kumar,
K. Parameshwar, Khwairakpam Nobin Singh, S. Nanda Kumar,
Anjali Chauhan, Satish Kumar, Parivesh Singh and V.N.            E
Raghupathy for the appearing parties.

    The Judgment of the Court was delivered by

      D.K. JAIN, J.: 1. This batch of appeals arises out of final F
orders dated 4th August, 2005 in Appeal No. C/139-140/02;
C/209102; C/288/03; C/291-93/03; C/299/03; C/243/02; C/264/
02 & C/313/03; 5th August, 2005 in Appeal No. C/265/03, 22nd
June 2005 in Appea• No. C/213/02 and 29th December, 2006
in Appeal No. C/300/03 passed by the Customs, Excise & ·
Service Tax Appellant Tribunal South Zonal Bench, Bangalore G
(for short "the Tribunal"). By the impugned orders, the Tribunal
has allowed the appeals preferred by the respondents-
importers.

                                                                 H
    1134     SUPREME COURT REPORTS                [2011] 12 S.C.R.


A        2. Since all the appeals involve a common question of law,
    these are being disposed of by this common judgment.
    However, in order to appreciate the controversy, the facts
    emerging from C.A. No. 2521 of 2006, which was treated as
    the lead case, are being adverted to. These are as follows:
B
        On 26th June 2001, the respondent entered into a contract
  with foreign suppliers viz: M/s Wilmar Trading Pvt. Ltd.,
  Singapore, for import of 500 Metric tons of crude sunflower
  seed oil at the rate of US $ 435 CIF/Metric ton. Under the
C contract, the consignment was to be shipped in the month of
  July 2001 but as the mutually agreed time for shipment was
  extended to 'Mid August 2001' vide Addendum dated 31st July
  2001, the goods were actually shipped on 5th August 2001. On
  filing of the bill of entry, the goods were assessed provisionally,
  pending verification of contemporary price, the original
D documents and the test report from the government chemical
  examiner.

       3. On verification of the documents filed, the Adjudicating
  Authority noticed certain discrepancies in the shipment period.
E Accordingly, on 5th October 2001, he issued a demand letter
  to the respondent under Rule 1OA of the Customs Valuation
  (Determination of Price of Imported Goods) Rules, 1988 (for
  short "CVR 1988") to show cause as to why the contract price
  be not rejected and the Customs duty be not determined by
F adopting contemporary invoice price on which other importers
  had entered into contract for supply of the same item either with
  the same supplier or other suppliers in the same country. Since
  the imputation in the show cause notice has a material bearing
  on the determination of the issue involved, the relevant portion
G of the notice is extracted below:

        "As per the condition incorporated in the contract dated
        26.6.2001, the goods are to be shipped during the month
        of July 2001. Whereas the goods were shipped after
        expiry of the Shipment period i.e. on 5.8.01. By the time
H       of actual shipment i.e. during August 2001, the international
    COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM1135
      v. AGGARWAL INDUSTRIES LTD. [D.K. JAIN, J.]
          market prices of the Crude Sunflower Seed Oil (Edible         A
          Grade),have increased drastically. Hence, the contract
          price is not acceptable in terms of Section 14(1) read with
          Rule 4 of Customs Valuation (Determination of Price of
          lmported,Goods) Rules, 1988."
                                                                        B
         4. In short, the case of the revenue was 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 of Rule   C
    4 of CVR 1988.

          5. In response, the plea of the respondent was that the
    contract envisaged extension of time for shipment but the
    exporter was bound to supply the oil at the agreed price despite
    delay of one month in shipment and further that in the absence      D
    of any evidence to show that they had paid or agreed to pay
    an extra price to the exporter for the consignment, the
    transaction value had to be the invoice price. However, the said
    plea did not find favour with the. Adjudicating Authority.
    Accordingly, he confirmed the demand indicated in the demand        E
    letter and ordered the respondent to pay the differential amount
    of duty. Respondent's first appeal to the Commissioner
    (Appeals) was unsuccessful.

         6. Being dissatisfied with the order of the Commissioner
                                                                        F
    (Appeals), the respondent took the matter in further appeal to
1   the Tribunal. As aforestated, by the impugned common order
    in the cases before us, the Tribunal has set aside the order of
    the Commissioner (Appeals) and held that there was no basis
    for demand of differential duty by ignoring the invoice price.
    Placing reliance on the decision of this Court in Eicher Tractors   G
    Ltd., Haryana Vs. Commissioner of Customs, Mumbai1, the
    Tribunal held as follows:

          "In the above mentioned case, the Supreme Court has held
    1.   2000 (122) E.L.T. 321 (SC): (2001) 1 sec 315.                  H
    1136    SUPREME COURT REPORTS                [2011] 12 S.C.R.


A       that in the absence of 'special circumstances, price of
        imported goods is to be determined under Section
        14(1)(A) in accordance with the Customs Valuation Rules,
        1988. The 'special circumstances' have been statutorily
        particularized in Rule 4(2) and in the absence of these
        exceptions, it is mandatory of Customs to accept the price
B
        actually paid or payable for the goods in the particular
        transaction. In all the cases, we find that the transaction
        value has been arrived at purely on commercial
        considerations based on contracts. The supplier, in order
        to honour the contracts, supplied the goods at the
c       contracted price. There is also no allegation that the
        appellants paid to the supplier more than the contracted
        value. Under these circumstances, there are actually no
        grounds to reject the transaction value."

D       7. Hence these appeals by the revenue.

       8. Mr. R.P. Bhatt, learned senior counsel, appearing for the
  revenue submitted that in the light of the invoices, in
  possession of the adjudicating authority, showing
E contemporaneous import of the crude sunflower seed oil at
  much higher price, the adjudicating authority was justified in
  invoking Rule 1OA of CVR 1988 and in rejecting the invoice
  price declared by the respondent-importer. It was argued that
  the contemporary invoices clearly indicated that at the time of
F actual shipment of the goods, the international market price was
  much higher and therefore, the transaction value declared by
  the respondent could not be accepted in terms of Rule 4 of CVR
  1988. Placing reliance on the decision of this Court in
  Commissioner of Customs (Gen), Mumbai Vs. Abdulla
  Koy/oth 2, learned senior counsel contended that in the light of
G cogent contemporaneous imports, showing much higher market
  price of identical goods as on the date of shipment of goods,
  the transaction value had been rightly rejected in terms of
  Section 14(1) read with Rule 4(2) of CVR 1988.

H 2. (2010) 13 sec 473.
  COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM1137
    v. AGGARWAL INDUSTRIES LTD. [D.K. JAIN, J.)
        9. Per contra, Mr. Shyam Divan, learned senior counsel,        A
  appearing for the respondent contended that in the absence
  of any material even remotely showing that the market price of
  crude sunflower seed oil at the time of execution of the contract
  by the respondent was higher than what was recorded in the
  invoice, the adjudicating authority had no reason to doubt the       B
  genuineness or the accuracy of the declared value, so as to
  attract Rule 10A of CVR 1988. It was pointed out that under
  clause 7 of the special conditions under the contract, entered
  into between the respondent and the foreign supplier, the
  respondent was obliged to extend the period of shipment and          c
  therefore, addendum dated 31st July, 2001 was signed,
. whereunder, except for the change in the period of shipment
  all other conditions, including the price of crude sunflower seed
  oil remained unchanged. It was argued that in the absence of
  any material brought on record by the revenue indicating that        D
  as on the date of contract, i.e. 26th June 2001, the market
  price of the crude sunflower seed oil was more than the
  contracted price, none of the special circumstances
  enumerated in Sub-rule 2 of the Rule 4 of CVR 1988 were
  attracted and thus, the revenue was bound to accept the invoice      E
  price as the transaction value.

      10. Before evaluating the rival submissions, it would be
 useful to have a bird's eye view of the relevant provisions.
 Section 14 of the Customs Act, 1962 (for short "the Act"), in
 so far as it is relevant for the present appeals, reads as follows:   F
      "14. Valuation of goods for purposes of
      assessment.-(1) For the purposes of the Customs Tariff
      Act, 1975 (51 of 1975), or any other law for the time being
      in force whereunder a duty of customs is chargeable on           G
      any goods by reference to their value, the value of such
      goods 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 of importation or exportation, as the case may      H
    1138    SUPREME COURT REPORTS                  [2011] 12 S.C.R.

                               '
A              be, in the course of international trade, where the
               seller and the buyer have no interest in the business
               of each other and the price is the sole
               consideration for the sale or offer for sale:

               Provided that such price shall be calculated with
B
               reference to the rate of exchange as in force on the
               date on which a bill of entry is presented under
               section 46, or a shipping bill or bill of export, as the
               case may be, is presented under section 50;
c       (1A) Subject to the provisions of sub-section (1), the price
        referred to in that sub-section in respect of imported goods
        shall be determined in accordance with the rules made in
        this behalf.

D       (2) Notwithstanding anything contained in sub-section (1)
        or sub-section (1A), if the Central Government is satisfied
        that it is necessary or expedient so to do it may, by
        notification in the Official Gazette, fix tariff values for any
        class of imported goods or export goods, having regard
        to the trend of value of such or like goods, and where any
E
        such tariff values are fixed, the duty shall be chargeable
        with reference to such tariff value.


                                                                    "
F
        According to Rule 2(1 )(f) of CVR 1988 "transaction value"
    means the value determined in accordance with Rule 4 of CVR
    1988. The relevant portion of Rule 4 reads as follows:-
        "4. Transaction value.- (1) The transaction value of
G       imported goods shall be the price actually paid or payable
        for the goods when sold for export to India, adjusted in
        accordance with the provisions of Rule 9 of these rules.

        (2) The transaction value of imported goods under sub-rule
H       (1) above shall be accepted:
COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM113g
  v. AGGARWAL INDUSTRIES LTD. [D.K. JAIN, J.]
   Provided that -                                                   A
    a.     the sale is in the ordinary course of trade under fully
           competitive conditions;

    b.     the sale does not involve any abnormal discount or
           reduction from the ordinary competitive price;            B

    c.     the sale does not involve special discounts limited
           to exclusive agents;

    d.     objective and quantifiable data exist with regard to      C
           the adjustments required to be made, under the
           provisions of rule 9, to the transaction value;

    e.     there are no restrictions as to the disposition or use
           of the goods by the buyer· other than restrictions
           which-                                                    D
    i.      are imposed or required by law or by the public
           authorities in India;

           or
                                                                     E
    ii.    limit the geographical area in which the goods may
           be resold; or

    iii.   do not substantially affect the value of the goods;

    f.     the sale or price is not subject to same condition        F
           or consideration for which a value cannot be
           determined in respect of the goods being valued;

    g.     no part of the proceeds of any subsequent resale,
           disposal or use of the goods by the buyer will accrue     G
           directly or indirectly to the seller, Unless an
           appropriate adjustment can be made in
           accordance with the provisions of Rule 9 of these
           rules; and
                                                                     H
    1140        SUPREME COURT REPORTS               [2011] 12 S.C.R.


A          h.    the buyer and seller are not related, or where the
                 buyer and seller are related, that transaction value
                 is acceptable for customs purposes under the
                 provisions of sub-rule (3).

B
                                                                 ·"

       11. On a plain reading of Sections 14(1) and 14(1A), it is
  clear that the value of any goods chargeable to ad valorem duty
C is deemed to be the·price as referred to in Section 14(1) of
  the Act. Section 14(1) is a deeming provision as it talks of
  deemed value of such goods. The determination of such price
  has to be in accordance with the relevant rules and subject to
  the provisions of Section 14(1) of the Act. Conjointly read, both
  Section 14(1) of the Act and Rule 4 of CVR 1988 provide that
0
  in the absence of any of the special circumstances indicated
  in Section 14 (1) of the Act and particularized in Rule 4(2) of
  CVR 1988, the price paid or payable by the importer to the
  vendor, in the ordinary course of international trade and
  commerce, shall be taken to be the transaction value. In other
E words, save and except for the circumstances mentioned in
  proviso to Sub-rule (2) of Rule 4, the invoice price is to form
  the basis for determination of the transaction value.
  Nevertheless, if on the basis of some contemporaneous
  evidence, the revenue is able to demonstrate tbat the invoice
F does not reflect the correct price, it would be justified in rejecting
  the invoice price and determine the transaction value in
  accordance with the procedure laid down in CVR 1988. It
  needs little emphasis that before rejecting the transaction value
  declared by the importer as incorrect or unacceptable, the
G revenue has to bring on record cogent material to show that
  contemporaneous imports, which obviously would include the
  date of contract, the time and place of importation, etc., were
  at a higher price. In such a situation, Rule 10A of CVR 1988
  contemplates that where the department has a 'reason to
H doubt' the truth or accuracy of the declared value, it may ask
COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM1141
  v. AGGARWAL INDUSTRIES LTD. [D.K. JAIN, J.]
the importer to provide further explanation to the effect that the     A
declared value represents the total amount actually paid or
payable for the imported goods. Needless to add that 'reason
to doubt' does not mean 'reason to suspect'. A mere suspicion
upon the correctness of the invoice produced by an importer
is not sufficient to reject it as evidence. of the value of imported   B
goods. The doubt held by the officer concerned has to be based
on some material evidence and is not to be formed on a mere
suspicion or speculation. We may hasten to add that although
strict rules of evidence do not apply to adjudication
proceedings under the Act, yet the Adjudicating Authority has          c
to examine the probative value of the documents on which
reliance is sought to be placed by the revenue. It is well settled
that the onus to prove under-valuation is on the revenue but once
the revenue discharges the burden of proof by producing
evidence of contemporaneous imports at a higher price, the             D
onus shifts to the importer to establish that the price indicated
in the invoice relied upon by him is correct.

    · 12. In Eicher Tractors Ltd. (supra), relied upon by the
Tribunal, this Court had held that the principle for valuation of
imported goods is found in Section 14(1) of the Act which              E
provides for the determination of the assessable value on the
basis of the international sale price. Under the said Act, customs
duty is chargeable on goods. According to Section 14(1), the
assessment of duty is to be made on the value of the goods.
The value may be fixed by the Central Government under                 F
Section 14(2). Where the value is not so fixed it has to be
decided under Section 14(1). The value, according to Section
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          G
trade. The word "ordinarily" implies the exclusion of special
circumstances. This position is clarified by the last sentence
in Section 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         H
    1142    ·SUPREME COURT REPORTS                [2011] 12 S.C.R.


A or· offer for sale. Therefore, when the above conditions
  regarding time, place and absence of special circumstances
  stand fulfilled, the price of imported goods shall be decided
  under Section 14(1A) read with the Rules framed thereunder.
  The said Rules are CVR 1988. It was further held that in cases
B where the circumstances mentioned in Rules 4(2)(c) to (h) are
  not applicable, the Department is bound to assess the duty
  under transaction value. Therefore, unless the price actually
  paid for a particular transaction falls within the exceptions
  mentioned in Rules 4(2)(c) to (h), the Department is bound to
c assess the duty on the transaction value. It was further held that
  Rule 4 is directly relatable to Section 14(1) of the Act. Section
  14(1) read with Rule 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
D indicated in Section 14(1). Therefore, what should be accepted
  as the value for the purpose of assessment is the price actually
  paid for the particular transaction, unless the price is
  unacceptable for the reasons set out in Rule 4(2). (Also See:
  Rabindr[! Chandra Paul Vs. Commissioner of Customs
E (Preventi11e), Shillong3.)
       13. Applying the above principles to the facts in hand, we
  are of the opinion that the revenue erred in rejecting the invoice
  price. As stated above, in the present case the whole
  controversy arose on account of difference in price of the same
F commodity, contracted to be supplied under different contracts
  entered into at different points in time. As aforesaid, in the
  instant case, admittedly the con~ract for supply of crude
  sunflower seed oil@ US$ 435 CIF/PMT was entered into on
  26th June 2001. It could not be performed on time because of
G which extension of time for shipment was agreed to between
  the contracting parties. It is true that the commodity involved had
  volatile fluctuations in its price in the international market but
  having delayed the shipment, the supplier did not increase the
  price of the commodity even after the increase in its price in
H 3. (2007) 3 sec 93.
COMMISSIONER OF CUSTOMS, VISHAKHAPATNAM1143
  v. AGGARWAL INDUSTRIES LTD. [D.K. JAIN, J.]
the international market. This fact is also proved by the actual      A
amount paid to the supplier. There is no allegation of the
supplier and importer being in collusion. It is also not the case
of the revenue that the transaction entered into by the
respondent was not genuine or under-valued. Nor was there a
misdescription of the goods imported. It is also not the case         B
of the revenue that the subject imports f~H within any of the
situations enumerated in Rule 4(2) of CVR 1988. It is manifest
from the show cause notice, extracted in para 3 supra, that the
contract value was not acceptable to the Adjudicating Authority
in terms of Section 14( 1) of the Act read with Rule 4 of CVR         c
1988 merely because by the time actual shipment took place
in August 2001, international price of the oil had increased
drastically. No other reason has been ascribed to reject the
transaction value under Rule 4(1) except the drastic increase
                             '
in price of the commodity in the international market and the         D
difference in price in the invoices in relation to the goods
imported under contracts entered by the respondents in the
month of August 2001. In our opinion, the import instances relied
upon by the revenue could not be treated as instances
indicating contemporaneous value of the goods because
contracts for supply of the goods in those cases were entered         E
into almost after a moF1th from the date of contract in the present
cases, more so, when admittedly there were drastic fluctuations
in the international price of the commodity involved. We are,
therefore, of the opinion that the revenue was not justified in
rejecting the transaction value declared by the respondents in        F
the invoices submitted by them.

    14. For the foregoing reasons, we do not find any merit in
these appeals. All the appeals are dismissed accordingly, with
no order as to costs.                                                 G
R.P.                                        Appeals dismissed.