Per Shri V.P. Gulati :

The issue in the appeal relates to the valuation of the goods under Section 14 (1) of the Customs Act. The appellants seek the acceptance of the invoice value while the revenue has adopted the import price of contemporaneous imports made by a Government of India undertaking for similar quantity. The learned lower appellate authority, based on a certificate of the suppliers that has been produced by the appellants, has allowed a quantity discount of 6.5% over the price at which the goods were invoiced in the other import.

2. The learned Advocate for the appellants has pleaded that the appellants have complied with all the requirements for acceptance of the transaction value in terms of Section 14 (1) read with Rule 4 of the Valuation Rules. He has pleaded, unless in law the appellant's transaction value could be discarded, a resort could not be had to Rule 5 of the Valuation Rules. He has pleaded, in the present case the appellant's representative had negotiations abroad with the suppliers and, thereafter, an agreed price was arrived at and the goods were supplied at that price to them. He has in this connection referred us to a certificate from the suppliers which was obtained from them after the customs authorities had raised objection and in which the suppliers have stated as under:

This is to certify that we are the exclusive distributors to India for Winchester Disk Drives manufactured by Maxtor Corporation Incorporated, San Jose, U.S.A.

The pricing of Disk Drives is uniform and standard throughout the International markets, but various discounts are offered to different buyers purely based on terms like exclusive standardisation, bulk offtake and special payment terms.

Consequently, Wipro Information Technology Limited, Bangalore have been given a discounted price based on about 5% (Five percent) general trade discount, 3.5% discount for special Letter of Credit payment terms and another 6.5% discount based on bulk offtake commitment.

3. He has referred us to their another certificate dated 13th June'89 wherein the following has been stated:

This is to certify that we are the local liaison office of Silicon Electronics, Santa Clara, U.S.A., who in turn are the authorised distributors to India for Maxtor Corporation Inc., San Jose, U.S.A. for their Winchester Disk Drives.

We wish to state here that the price of 380 MB SCSI Drives being charged to M/s. Wipro Information Technology Ltd., namely US $ 1540.00 (US Dollars are thousand five hundred forty only) has been arrived at after several negotiations between Maxtor Corporation, U.S.A. and Wipro Information Technology Ltd., India and this is the rock bottom price based on bulk offtake and special payment terms etc.

Wipro Information Technology Ltd., were the first and largest buyers of 380MB & 760MB Drives for us in India and their offtake figures are also very large compared to other sporadic buyers who buy upto 5/20 drives per annum (whereas Wipro buys them in hundreds per order).

We have therefore been supplying Maxtor Winchester Disk Drives to Wipro at extremely competitive prices, keeping very low margins for our operations, in view of standardization by this one of the largest buyers in India.

4. He has pleaded that the price was a negotiated one and, therefore, should have been accepted for assessment under Section 14 (1) of the Customs Act.

5. The learned JDR has pleaded that in terms of the supplier's certificate it has been clearly stated that the suppliers have a uniform standard price throughout the international market but they offered discounts to different buyers based on terms like exclusive standardisation, bulk offtake and special payment terms. He has pleaded in this background there should have been some negotiations for arriving at the price at which the goods had been supplied to the appellants. He has pleaded that no evidence has been produced regarding standard price applicable for the international market and the reasons for which va