Per Gowri Shankar : Appeal taken up for disposal today along with other appeals involving identical issue which has been listed for hearing.

2. The common issue for consideration in these five appeals is the determination of value of a ship imported by each of the respondents for breaking up. In each case, after the vessel arrived at the port, some defects or short coming was noticed by the buyer which led them to renegotiate the price. The details of the defects and short comings, the date of having them noticed and the reduction in price are summarized in the annexure to this order.

3. The bills of entry which were filed for clearance of the goods has indicated as the basis for valuation the reduced price. These reduced prices were not accepted by the department on the view expressed in the orders of the adjudicating authority that the reduction in the prices after the goods arrived in India cannot be accepted. The provisional assessments, under which the goods were cleared on arrival were finalised by not giving accord to the reduction in prices.

4. Each of the importer appealed the orders to the Commissioner (Appeals). The Commissioner (Appeals), in the various orders passed, held that transaction value i.e. the price which was actually paid paid for the goods was the reduced price, accepted and allowed the appeals. Hence these appeals by the department.

5. The identical grounds in the appeals are that allowing the appeals will result in importers reducing the value on baseless ground. Reliance is also placed upon the order of the Tribunal in CC Vs. Saibaba Ship Breaking Corporation (C/1039/99).

6. The agreements for the sale of the ship appear to have more or less similar wordings. We shall take, as an example, the agreement entered into by Rai Metal Works Pvt. Ltd. Clause I describes the ship with is tonnage and other appurtenances of the vessels. Clause 2 emphasises that the buyers will accept the vessel without inspection. The sale is definite and outright subject only to the terms and conditions and exceptions. Clause 3 makes for delivery and taking possession on totally "as is" condition as specified. Clause 7 provides that except as expressly provided in clauses 11 and 19 thereof, the sellers make no representation, warranties or guarantees of any kind, either express or implied as to the vessel or the condition of classification status of the vessel, with all her outfit, equipment and spares, shall be taken with all faults and errors and description without any allowance or abatement." Clause 19 has specific description of the vessel. Its type, gross tonnage, light displacement tonnage, details of the engine, propeller and generator which is described as 3 x Daihatsu (6PST-26B) ABT 450 KW.

7. The addendum to the memorandum of agreement, substitutes for the description of the generator "3 x Daihatsu (6PST-26B) ABT 450 KVA."

8. The value referred to in Rule 4 of the Customs Valuation Rules, 1988 is the value for sale of goods that are imported into India. In terms of the said rule, it is the transaction price paid for the goods. It can hardly be disputed that, for that price to apply, it must be the price for the goods which the buyer and the seller had contracted to buy and sell respectively. If the goods which are actually imported in pursuance of an agreement are different from the goods which were contracted to be bought and sold, the value as agreed to in the agreement will not be the transaction value for the goods which have arrived. The transaction value was for sale and purchase of another commodity and not the commodity that has arrived. Thus,if for example, the ship was a sailing ship, namely "NEVA-II" instead of ship for breaking up it can hardly be disputed that insistence of acceptance of agreed value would be incorrect. Similar would be the case, if it was actually a ship with a lesser tonnage. In other words, if the goods which are actually delivered, are different material from the goods which have bee