St. Thomas Hospital and Research Centre imported a machine from Long Life Scientific Ltd., USA for in-house research. The price of the machine was settled at US $8,000. The machine was shipped on 10th March, 2018. Meanwh

CS Professional · Advanced Tax Laws and Practice · PYQS · December 2018
St. Thomas Hospital and Research Centre imported a machine from Long Life Scientific Ltd., USA for in-house research. The price of the machine was settled at US $8,000. The machine was shipped on 10th March, 2018. Meanwhile, the hospital authorities negotiated for a reduction in the price. As a result Long Life Scientific Ltd. agreed to reduce the price by $500 and communicated the revised price of $7,500 by sending a fax message dated 14th March, 2018. The machine arrived in India on 17th March, 2018. The Commissioner of customs has decided to take the original price as the transaction value of the goods on the ground that the price is reduced only after the goods have been shipped. Do you agree with the step taken by the commissioner? Give reasons in support of your answer.

Answer & Explanation:

No, the commissioner's approach is not correct in the law. As per section 14 of the Customs Act, 1962, the transaction value is the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation. Further, Supreme Court in the case "Garden Silk Mills vs UOI" has held that importation get complete only when the goods become part of mass of goods within the country. In the given case, the price of the goods was reduced while the goods were in transit, it could not be contended that the price was revised after importation took place. Hence, the goods should be valued as per the reduced price, which was the price actually paid at the time of importation.

Topics: Customs Act, 1962

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