IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 146 OF 2004

Commissioner of Customs (Prev.), Gujarat ...Appellant(s)

Versus

M/s. Atam Manohar Ship Breakers Ltd. ...Respondent(s)

O R D E R

The issue for consideration in this Civil Appeal concerns determination of

the value of a ship imported by M/s. Atam Manohar Ship Breakers Ltd. (respondent

herein).

On 13th April, 1999, a Memorandum of Agreement (MoA) was entered into

between the respondent and the seller for importing the vessel for ship breaking.  In

the  said  MoA,  the  value  indicated  was  USD  9,70,906.23.   The  ship  arrived  at

Bhavnagar on 19th April, 1999.  The Customs Officer boarded the ship for inspection

on 20th April, 1999.  On the same day, a Survey Report was prepared stating that the

vessel  was suitable to stay afloat at Alang anchorage.  On 20th April,  1999, Entry

Inward was given to the vessel.  On 21st April, 1999, physical delivery was given by

the Master to the respondent.  The respondent filed its Bill of Entry on 29th April,

1999 in which there was a reference to the MoA dated 13th April, 1999.  At this stage,

it  may  be  mentioned  that,  according   to  the  respondent,  on  29th April,  1999,  an

Addendum

  ...2/-

CA 146/04..contd..

-2-

No.II came to be inserted in the MoA dated 13th April, 1999 which addendum existed

on  29th April,  1999  when  the  Bill  of  Entry  stood  filed.   By  virtue  of  the  said

addendum, the price stood reduced from US$ 9,70,960.23 to US$ 8,70,960.23.  To

complete  the  chronology  of  events,  it  may  be  stated  that  on  28th May,  1999,  a

provisional assessment was made which was finalized by the Assessing Officer (AO)

on 11th January, 2001 on the basis of the value of the vessel fixed at US$ 9,70,960.23.

The matter was carried in appeal by the respondent to the Commissioner who came

to the conclusion, on the facts of the case, that since the price stood reduced prior to

the  filing  of  the  Bill  of  Entry,  that  price  constituted  the  value  of  the  vessel.

Accordingly, the Commissioner reversed the order of the AO holding that the value

of  the  vessel  was  not  US$  9,70,960.23   but  US$  8,70,960.23.   This  decision  was

confirmed by the Tribunal.  Hence, this Civil Appeal.

At the outset, we may state that we are concerned with  the facts of the

present case alone.  We do not intend to lay down the law in this case.  We have not

examined the said question.

We may also point out that in this case we are basically concerned with the

genuineness of the addendum to the  MoA  dated  13th April, 1999.  If  one looks at the

said

 ...3/-

CA 146/04..contd..

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addendum, we find that the date on which the said addendum stood executed is not

given.  Further, when did the addendum stand incorporated in the MoA.  We do not

find  the  date  on  which  the clause  stood  inserted in  the  MoA.   Further,  the  said

addendum does not give any reason for reduction in the price from US$ 9,70,960.23

to US$ 8,70,960.23.  Further,  the most clinching factor to be seen is  that the said

addendum appears to have been executed at the request of the buyer.  In our view,

this is a self-serving document.  In this connection, it may also be noted that the MoA

dated 13th April, 1999 states that the vessel is bought on “as is where is” basis.  If that

be the case, we do not know on what basis the value of the vessel stood reduced from

US$ 9,70,960.23 to US$ 8,70,960.23.   Lastly, it is stated on record that one of the

items  was  not  in  a  working  condition  and  by  way  of  damages,  the  price  stood

reduced.  It is not so stated in the addendum.  If it is the case of damages, then, surely

it would have been so stated in the addendum.   

For the afore-stated reasons, we set aside the impugned judgment and we

allow this Civil Appeal of the Department with no order as to costs.

                         ...................J.             (S.H. KAPADIA)

                        ...................J.

                                       (B. SUDERSHAN REDDY) New Delhi,

November 11, 2008.