JUDGMENT

By consent, the order dated 20th September, 1994 is recalled.

2. The appellant - M/s. Basant Industries, sought clearance of goods imported against their licence No. P/S/1943043 dated 6th September. 1983. The price of the goods imported, namely, TAM Brand bearings No. 751 1 was U.S. $ 1.80 CIF per piece. On the allegation that the goods of the same description had been imported by M/s. Ravi Agricultural Industries, Agra under Invoices Nos. FDN 849031 dated 4th June, 1984 and FDN 849031 B dated 24th August, 1984 at a price of U.S. $ 2.20 CIF per piece, the Department issued a show cause notice dated 26th November, 1984 to show cause why the duty on the difference of price and penalty should not be recovered from the assessee. Cause was shown by the assessee by letter dated 11th December, 1984 stating that the price was fixed after negotiations and in support thereof the correspondence that had ensued between the importers and suppliers was tendered in evidence. The correspondence revealed that there had been some bargaining in the matter of fixation of price before the suppliers agreed to a price of U.S. $ 1. 80 CIF per piece. Notwithstanding the same, the Additional Collector of Customs, Bombay directed that the goods be valued at U.S. $ 2.20 CIF per piece for the purposes of levy of duty and licence purposes although he refrained from imposing a penalty on the importers. Against the said decision of the Assistant Collector, the assessee preferred an appeal before the Tribunal. In the appeal, in addition to the correspondence which had already been produced on the record, the assessee also produced another invoice of a different supplier which showed that he had charged a price of U.S. $ 1.80 CIF per piece from M/s. India Casting Co. The Tribunal, however, affirmed the decision of the Additional Collector and hence, this appeal.

3. Ordinarily, this Court would not like to interfere in a matter of price fixation, but at the same time it seems necessary to impress upon the Department that by a mere comparison of two invoices without anything more, it may not be correct to proceed on the premise that there is under-valuation. The relationship between the supplier and importer has also to be kept in mind because it is a matter of common knowledge that a price which is offered by a supplier to an old customer may be different from a price which the same supplier offers to a totally new customer. In the instant case, we find from the correspondence, that had ensued between the supplier and the appellant importer that there was some bargaining before the price of U.S. $ 1.80 CIF per piece was finalised. The first is a letter of 18th June. 1984. In that letter the supplier has stated that,

"We offer our last price at the rate of U.S. $ 1.80 CIF BBY. Subject to your purchase of total quantity of 49670 PCS and no rebate is allowed."

It was also stated in that letter that their principals were supplying the said commodity to them at U.S. $ 1.69 per piece. That was to indicate the margin of profit for the supplier. To this, the importer responded by writing a letter dated 9th July, 1984 stating that they were not interested in purchasing the entire quantity of 49670 pieces and requested the supplier to offer the rates quantity-wise i.e. to indicate the price on the basis of quantity. In response to that letter, the supplier wrote a letter dated 23rd July, 1984 stating as under:

"Please note as you are our old and valuable (SIC), we can supply you smaller quantities on the following price :

10,000 Pcs. At the rate of US $ 2.20 each CIF Bombay.

20,000 Pcs. At the rate of US $ 2.00 each CIF Bombay.

40,000 Pcs. At the rate of US $ 1.80 each CIF Bombay."

4. It will, thus, be seen that the price of U.S. $ 1.80 each for 40,000 pieces was fixed after considerable negotiations and was fixed after keeping in view that the importers were old and valued customers. It is not known whether the other importer, namely, M/s. Ravi Agricultural Industries ha