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CASE NO.: Appeal (civil)  3813 of 2005

PETITIONER: Commissioner of Customs New Delhi

RESPONDENT: M/s Prodelin India (P) Ltd.

DATE OF JUDGMENT: 31/08/2006

BENCH: Dr. AR. Lakshmanan & Tarun Chatterjee

JUDGMENT: J U D G M E N T

Dr. AR. Lakshmanan, J.

This appeal is filed by the Commissioner of Customs  (ICDs), Tughlakabad against the final order No. 1425/04-NB-A  dated 20.12.2004 passed by the Customs, Excise and Service  Tax Appellate Tribunal, New Delhi in Appeal No. C-396/04- NB/A by which the CESTAT has allowed the appeal filed by  the respondent. The brief facts leading to the filing of the present appeal  are as under: The respondent-Company i.e., M/s Prodelin India (P) Ltd.  (for short "M/s PIPL") was set up under an agreement between  M/s Prodelin Corporation U.S.A. (for short "M/s PC USA") and  one Mr. Ashok Mago of New Delhi for marketing facility for  promotion and selling VSAT Antennas, accessories and other  communication equipments, assembly of equipments, testing,  servicing etc. As per the joint venture agreement M/s PC USA owns  75% of equity shares in M/s PIPL which shall assemble and  test feed components provided by M/s PC USA and will  service, test and install these products.  Technical service fee  was also to be paid by M/s PIPL to M/s PC USA for the period  1.10.1997 to 30.9.1998 @ US $ 25,000 per month in terms of  technical service agreement between the two companies.  A  copy of the joint venture agreement dated 1.9.1997 has been  filed and marked as annexure P-1. On the basis of the documents and information provided  by the respondent, the Dy. Commissioner of Customs, ICD,  passed an order on 11.1.2001 for loading of 10% in the invoice  value of the goods imported from M/s PC, USA.  As per the  Department, M/s PIPL, India and M/s PC, USA are related  persons in terms of Rules 2(2)(i) and 2(2)(iv) of the Customs  Valuation (Determination of Price of Imported Goods)  Rules,  1988 (for short "the Rules") and this relationship had  influenced the price of the imported goods. Vide order dated 17.3.2004, the Commissioner of  Customs (Appeal) Delhi-II  passed in Appeal No.  CCA/CST/74/D-II/2004 dismissed the appeal preferred by  the respondents upholding the order dated 11.1.2001 passed  by the Dy. Commissioner, ICD, TKD.  The Commissioner held  that as regards the relationship between the respondents and  its foreign collaborator, it is manifestly clear that they had a  complex and interwoven relation in which the latter did not  only have 75% of the equity shares but also had their own  three of the four Directors in the Board of Directors of the

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respondent, therefore, it is correctly held by the Adjudicating  Authority that their foreign collaborator are related persons  covered by  Rules 2(2)(i) and 2(2)(iv) of the Rules.  It  also held  that the foreign company had a controlling interest in the  activities of the company.  It was further held that it is not a  case which is covered by Rules 4(3)(b) and 4(3)(a) of the Rules  and it is clear that the relations between the two companies  would have a bearing on the value of the goods imported. The respondent preferred an appeal against the said  order of the Commissioner of customs (Appeals), Delhi-II  before the Customs, Excise and Service Tax Appellate  Tribunal, R.K. Puram, New Delhi (for short ’CESTAT’).  The  CESTAT vide its impugned judgment and final order dated  20.12.2004 had allowed the appeal and set aside the  impugned order on the ground that though the authorities  were right in holding that the transaction was between related  person inasmuch as the importer was a joint venture in which  the foreign supplier was the partner, however, that by itself,  was no ground to make addition to sale price.  The CESTAT  has held that the reference to raw material is for assistance in  sourcing of supply.  A sourcing assistance can be required  only when the sourcing is from a third party and not when it is  from one of the partners.  It was submitted that the CESTAT  has only  half interpreted the clause of control of foreign  partner regarding source of raw material from where the raw  material was to be procured.  The other half of the clause i.e.  price in details has not been discussed at all and that the  CESTAT has failed to appreciate that in this case, the foreign  company has the controlling interest in the Indian Company  and that the respondent was under obligation to procure  components only from the foreign collaborator or M/s Tata  Advance Material Ltd. with whom the foreign collaborator has  an agreement.  Therefore, the technical fees paid, have  definitely influenced the price of the goods imported.    Aggrieved by the order dated 21.12.2004, the Commissioner of  Customs has come up before this Court. We have heard Mr. Harish Chandra, learned senior  counsel, appearing for the appellant and Mr. Shyam Divan,  learned senior counsel, appearing for the respondent. Mr. Harish Chandra, learned senior counsel appearing  for the appellant invited our attention to the orders passed by  the Dy. Commissioner of Customs, Commissioner of Appeals  and by the CESTAT.  He also invited our attention to the 1988  Rules and submitted as under: (a)     The impugned final order is not sustainable  since the CESTAT has only interpreted half of  the clause of control of foreign partner regarding  the source of raw material from where the raw  material was to be procured.  The other half of  the clause related to the pricing details i.e. the  price of procurement has not been discussed  much less adjudicated upon. (b)     The Tribunal failed to appreciate that in this  case the foreign company i.e. M/s PC USA has  the controlling interest in the respondent- Company since 75% of the equity shares are  controlled by the foreign company and that it  has its three of the four Directors in the Board  of Directors of the respondent.  Therefore, the  respondent  and their foreign collaborators are  related persons in terms of Rule 2(2)(i) and Rule  2(2)(iv) of the Rules.  The Tribunal completely  failed to appreciate that this relationship had  influenced the price of the goods imported and  the adjudicating authority was justified in

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loading 10% in the invoice value of the goods  imported. (c)     The Tribunal failed to consider that admittedly,  during the period from 1.10.1997 to 30.9.1998  an amount @ US $ 25000 was paid as technical  fee by the respondent to the foreign  collaborator.  In the whole, the total value of  import during the period 1997-98 to 2000-2001  (up to 25.9.2000) was US $ 25,78,837 and the  total amount of technical service paid by the  respondents was US $ 2,58,000 thus the  loading factor was 10% and adjudicating  authority was correct in directing the same to be  added in the valuation of the goods imported.    (d)     The Tribunal failed to appreciate that the  technical fee as mentioned above was paid not  only for post operative function but it was also  for pre-operative function such as supply of  design, drawing, fabrication drawing, detailed  drawing design for manufacture of dyes,  assembly testing and alignment of feed etc.  The  Tribunal failed to consider that the imports  made by the respondent were of finished goods  and component of different sizes of VSAT  Antennas do not require any post operative  function. (e)     The Tribunal failed to consider that the  respondent had not submitted any documentary  proof at any level to substantiate their claim  that the value of the imported goods is more  than the indigenously procured goods.  The  impugned final order is silent on this crucial  point while accepting the declared value as full  commercial value. (f)     The Tribunal failed to consider that the  respondent was under obligation to procure  components from the foreign collaborator or  from M/s Tata Advance Material Ltd. with  whom the foreign collaborator M/s PC USA had  an agreement.  Therefore, the technical fee,  admittedly paid, has definitely influenced the  price of the goods imported. Our attention was also drawn to the joint venture  agreement entered into between the parties and the salient  features contained therein and in particular, the purpose of  agreement between the parties, financial participation,  Management, Obligations of the first party and of the second  party, Marketing, Competition, voting and  arbitration etc.         Per contra, Mr. Shyam Divan, learned senior counsel  appearing for the respondent drew our attention to the various  clauses in the technical service agreement and submitted that  the Customs Department was of the view that the respondent  appeared to be a related person of the first party that is PC  USA in terms of Rules 2(2)(i) and 2(2)(iv) of  the Rules and that  as per Rule 4(3)(a) of the  Rules where the buyer and seller  were related, the transaction value shall be accepted provided  that the circumstances of the sale of imported goods indicate  that the relationship did not influence the price.  Hence,  according to them the declared price could not be accepted as  transaction value.  Therefore, the appellant started enquiries  in respect of the amount of US $ 2,58,000 paid in two  instalments by the respondent PC USA.  It was submitted that  as per Article 11 para 2.1 of the Technical Service Agreement,  the respondent had to pay a sum of US $ 25000 per month to  M/s PC USA.  The appellant sought clarification from the

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respondent on this aspect. It is useful to refer to the letter of    respondent dated 18.10.2000 that this fee was paid to the first  party for the following considerations: (a)     free training, technical, mechanical and in the field of  electronic communication to PIPL, India staff; (b)     frequent visit of M/s PC USA’s technical experts to  India to guide the PIPL staff and solve customer  technical problems; (c)     supply of specialized fixtures free of cost for quality  assurance of the material fabricated in India; (d)     supply of electronic test gear free of cost for assembly,  testing and alignment of feeds in India; (e)     design drawings, fabrication drawings, assistance to  modify design and fabrication drawings to suit the  material available in India; (f)     approval of products manufactured in India in the  initial stage; (g)     respond to day-to-day technical queries raised by M/s  PIPL, India and (h)     providing detail design drawings for manufacture of  dyes in India for on-going indigenisation program and  future exports. He further submitted that despite a categorical reply by  the respondent, which clearly shows that the technical fee of  US $ 2,58,000 was paid towards the operation of different type  to be performed in India and has nothing to do with the price  of the imported goods, the original authority took the view that  the technical assistance provided by PC, USA to the  respondent is not merely for marketing or management of  imported goods but was essential for assembly/production of  the end product by using imported goods.  It was further held  that the supply of electronic test gears and specialized fixtures  has been stated to be free of cost whereas the technical service  fee was paid for these items also.  Further M/s PC USA and  Tata Advance Material Ltd., Bangalore were having  collaboration agreement and M/s Tata Advance Material Ltd.  which further shows indirect control over M/s PIPL India by  M/s PC USA.  It was held by the original authority that the  amount paid as technical service fee, being the consideration  for technical know-how and was includible in the value of the  imported goods in terms of Rule 9(1)(c) of  the Rules.  Since  according to the adjudicating authority no separate break-up  for consultation or training had been given by the respondent,  the appellant was loaded to the import value worked out to  10% of the invoice value of the goods imported by the  respondent from M/s PC USA.   Aggrieved by the said order, the respondent filed appeal  before the Commissioner of Customs(Appeals), New Delhi and  canvassed many submissions.  However, it was held that the  respondent was under obligation to procure components only  from the foreign collaborator or from TAML with whom the  foreign collaborator had an agreement.  Therefore, according  to the appellate authority, the relation between the two would  had definitely influenced the price of the imported goods. Learned senior counsel appearing for the respondent  invited our attention to the concluding portion of the order  passed by the CESTAT which has held in clear terms as  under: "We have perused the records and considered the  submissions made by both sides.  True, the authorities are  right in holding that transaction is between related persons  inasmuch as the importer is a joint venture in which the  foreign supplier is a partner.  However, that by itself is no  ground to make addition to sale price.  A perusal of the  service agreement makes it clear that its area of coverage is

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mainly manufacturing, design, know-how specifications,  drawings and all types of tooling equipment etc.  The  reference to raw materials is for assistance in sourcing of  supply.  A sourcing assistance can be required only when  the sourcing is from a third party and not when it is from  one of the partners.  It would be placing an artificial meaning  to assistance for sourcing, if sale to each other is also treated  as requiring assistance in sourcing i.e. locating the best  source or supply.  We are of the view that such an artificial  meaning is not justified.  There is no other material on  record to indicate that the sale price in the present case is  not a full commercial price.  In these circumstances, we are  of the opinion that the transaction value between the parties  cannot be treated as anything other than a commercial price.   Such a price commends itself as assessable value.  The  impugned order is not sustainable.  Accordingly, it is set  aside and the appeal is allowed with consequential relief, if  any, to the appellant."

Elaborating his submissions, learned senior counsel  appearing for the respondent, submitted the following points: (a)     that the order of CESTAT has taken into  consideration and correctly interpreted the joint  venture agreement; (b)     that the technical fee was only in respect of the  assistance given by M/s PC USA i.e. the first  party in design and assembly of antenna  system in India; (c)     that no evidence is brought on record to show  that value of imported finished goods does not  reflect the full commercial value; (d)     that the department did not bring any evidence  to controvert the contents of their letter dated  18.10.2000; (e)     that the procurement of some parts from TATA  Advance Material Ltd. had no bearing on the  price of the imported goods; and (f)     that the CESTAT has followed their earlier  judgments. Learned senior counsel appearing for the respondent has  also invited our attention to the various findings rendered by  the Tribunal and of the CESTAT with reference to the  agreement and other documents. We have given our careful consideration to the arguments  advanced by the learned senior counsel appearing for the  appellant and countered by the learned senior counsel  appearing for the respondent. It was argued by the learned senior counsel appearing for  the appellant that the CESTAT has interpreted only half of the  clause of control of foreign partner regarding the source of raw  material from where the raw material was to be produced.   According to him, the other half of the clause related to the  pricing details i.e. the price of procurement has not been  discussed much less adjudicated upon. The above submission, in our view, is factually as well as  legally untenable. The CESTAT has in clear terms taken into consideration  the various clauses of the joint venture agreement and came to  the correct conclusion that the service agreement was mainly  manufacturing, design, know-how specifications, drawings  and all types of tooling equipment etc.  The reference to raw  materials is for assistance in sourcing of supply.  A sourcing  assistance can be required only when the sourcing is from a  third party and not when it is from one of the partners.  It  further held that it would be placing an artificial meaning to

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assistance for sourcing i.e. locating the best source or supply.   Therefore, the CESTAT held in clear terms that such an  artificial meaning was not justified.  Therefore, the contention  of the appellant that the CESTAT had only interpreted half of  the clause related to pricing detail is neither factually nor  legally correct. Learned senior counsel  appearing for the Department  contended that the technical fee was paid not only for post  operative function but it was also for pre-operative function  such as supply of design, drawing, fabrication drawing,  detailed drawing design for manufacture of dyes, assembly  testing and alignment of feed etc.  This submission, in our  view, has no force.  There is nothing  in the joint venture  agreement which may reveal that M/s PC USA has charged  any technical fee for any pre-operative function of the antenna  system.  There is no denial of the fact that some of the  parts/components of the antenna system were being supplied  by M/s PC USA the price at which the said parts were  supplied at full commercial value without having been  influenced by the joint venture agreement.   (i)     A perusal of the joint venture agreement would  clearly reveal that all the activities for which the  technical fee was being paid by the respondent  was for various functions which were to be  carried out in India.  It is wrong on the part  of  the appellant to link the design, drawing,  fabrication drawing, manufacture of dyes,  assembly testing and alignment of feed etc.  with  the imported parts being supplied by M/s PC  USA.  The appellant has totally confused the  issue and has wrongly linked the price of the  parts of antenna with that of the various  functions which lead to the  assembly/manufacture of complete antenna for  which M/s PC USA was to provide assistance to  the respondent-Company.  There is nothing on  record to show that any technical fee was paid in  respect of the goods being manufactured and  supplied by PC USA to the respondent.   A perusal of the details given in the letter dated  18.10.2000 and referred to in paras supra would clearly set  the whole controversy at rest inasmuch as there is nothing in  this break up or the various consideration which could lead to  prove the department that the said technical fee related to the  price of the imported goods.  In our view, the Department has  wrongly interpreted these clauses and wrongly attributed  design, drawing, fabrication etc. to the imported goods  whereas a perusal of this break up clearly reveals that the  technical fee is in respect of the various jobs/consideration  which M/s PC USA was to perform in respect of the  manufacture of the antennas system in India.  It would also be  evident by the findings given by the lower authorities and  various grounds raised by the appellant before this Court that  they are drawing unwarranted inferences and trying to relate  to the various activities which M/s PC USA was to perform in  terms of the joint venture agreement and trying to relate the  same to the imported good.  Such a course on the part of the  appellant cannot be countenanced. Further the appellant in their appeal itself have admitted  at Para 2(c) about the scope of the services which M/s PC USA  was to provide to the respondent.  A perusal of their own  appeal would reveal that there is nothing on record to show  that any technical fee was being charged in respect of the  imported goods or pre-import function.  Therefore, various  contentions raised by the Department, in the present appeal,

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are wholly devoid of any merit. This apart, the Department has not brought any evidence  on record to show that the relationship between the  respondent and M/s PC USA has influenced the price or value  of the imported goods.  There is no evidence brought by the  appellant that their relationship did influence the price of the  imported components. It is settled law that the onus to prove that the declared  price did not reflect the true transaction value is always on the  Department.  It is also a settled law that the Department is  bound to accept the transaction value entered between the two  parties.  It is not the case of the Department that M/s PC USA  were exporting the identical goods to other importers at higher  price and that the Department has not made any effort to  bring on record any evidence that identical or similar goods  were imported by other importers at higher price.  Therefore,  in view of the clear position of law about the acceptance of the  transaction value, the Customs authorities could not add the  technical know-how fee in respect of the post-importation  activities to the assessable value of the imported goods. Our attention was also drawn to Rule 9(1)(c) of the Rules  which reads as under: "9. Cost and Services- (1) In determining the transaction  value, there shall be added to the price actually paid or  payable for the imported goods, - (a)\005\005\005\005\005\005\005\005\005\005 (b)\005\005\005\005\005\005\005\005\005\005.. (c) royalities and licence fees related to the imported goods  that the buyer is required to pay, directly or indirectly, as a  condition of the sale of the goods being valued, to the extent  that such royalities and fees are not included in the price  actually paid or payable."

The original authority has ordered for loading of their  value of the imports by 10% in terms of  the said Rules which  provide that they shall be added to the price actually paid or  payable for the imported goods royalities and license fees  related to the imported goods that the buyer is required to pay  directly or indirectly, as a condition of the sale of the goods  being valued, to the extent that such royalities and fees are  not included in the price actually paid or payable.  However,  the respondent have proved beyond doubt that what they had  paid to M/s PC USA was not in respect of the value of the  imported goods but the technical fee for post-importation  operation.   The Department, in their grounds of appeal, before this  Court relied upon the provisions of  Rules 2(2)(i) and 2(2)(iv)  and also Rules 4(3)(a) and 4(3)(b) of  the Rules.  For the sake of  convenience, the Rules on which the Department is relying  upon are reproduced hereinbelow: "Rule 2(2)(i) : they are officers or directors of one another’s  businesses; Rule 2(2)(ii)\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005. Rule 2(2)(iii)\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005\005 Rule 2(2)(iv) : any person directly or indirectly owns, controls  or holds 5 per cent or more of the outstanding voting stock  or shares of both of them; "

"Rule 4(3)(a) Where the buyer and seller are related, the  transaction value shall be accepted provided that the  examination of the circumstances of the sale of the imported  goods indicate that the relationship did not influence the  price.

Rule 4(3)(b) In a sale between related persons, the

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transaction value shall be accepted, whenever the importer  demonstrates that the declared value of the goods being  valued, closely approximates to one of the following values  ascertained at or about the same time \026

(i)     the transaction value of identical goods, or of similar  goods, in sales to unrelated buyers in India; (ii)    the deductive value for identical goods or similar goods; (iii)   the computed value for identical goods or similar goods."

Even assuming for argument’s sake that the respondent  and M/s PC USA are related persons even in that case their  transaction value is to be accepted provided that the  examination of the circumstances of the sale of the imported  goods indicate that the relationship did not influence the price  and the importer demonstrates that the declared value of the  goods being valued, closely approximates to the value for  identical goods or similar goods.  In the present case, a  perusal of the order-in-original would reveal that the loading  was ordered in terms of Rule 9(1)(c) of  the Rules.  There was  no challenge to the value declared by the respondent before  the Customs Authorities.  There was also no finding in the  Order-in-original that the value was not increased with  Custom Valuation Rules, 1988  read with Rules 2(2)(i), 2(2)(iv),  4(3)(a) and 4(3)(b). However, in the grounds of appeal, it is not the case of  the Department that the value requires to be loaded because  of the provisions of Rule 9(1)(c).  But the Department is  treating the respondent and M/s PC USA as a related person  and straightaway invoked Rule 4(3)(a) or 4(3)(b).  The  Department, in our view, cannot adopt such a course unless it  is alleged that some evidence is brought on record that the  prices at which M/s PC USA had supplied the imported goods  to the respondent was not reflecting the correct transaction  value.  Therefore, their appeal is contrary to the grounds on  which the original authority had ordered loading of the  assessable value.  The appellate authority also held that the  loading was required in view of rule 9(1)(c) of the Rules.  The  appellate authority, in fact went beyond the scope of  the  Order-in-Original and gave findings which were contrary to the  Order-in-original.   He entered into the issue of share holding  and held that it was not a case which was covered by Rule  4(3)(a) and (b).  Some of  the findings rendered by the appellate  authority is unwarranted and that the first appellate authority  could not have given unsubstantiated findings and could not  upheld the order of the original authority on the ground  different from the findings of the adjudicating authority.   Therefore, viewed from any angle, the appeal filed by the  Department is wholly misconceived.   In the instant case, the appellant had reproduced the  contents of their letter dated 18.10.2000 wherein they had  brought on record the considerations for which they had paid  fee to M/s PC USA and had nothing  to do with the imported  goods and M/s PC USA was only supplying the parts of  antenna systems and not a complete antenna.  This letter has  been reproduced in the order of the Deputy Commissioner.   However, he did not controvert the contentions raised by the  respondent before him but went on to load the assessable  value by 10% in terms of rule 9(1)(c).  When the respondent  had taken a categorical stand about the nature of technical fee  to be paid to M/s PC USA and it was clearly contended that it  was for post-importation activity, it was obligatory on the part  of the original authority to have controverted the contents of  the said letter.   He simply ignored the same and went on to

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pass an adverse order.  In the appeal also, the Department  have accepted the same.  Therefore, in the absence of anything  brought on record contrary to the submissions of the  respondent, the nature of technical fee, it is not open for the  appellant to justify the loading of 10% in the invoice value  ordered by the original authority. We shall now consider the arguments advanced by  learned counsel appearing for the respondent that the  procurement of some parts from M/s Tata Advance Material  Ltd. had no bearing on the price of the imported goods.  In this  connection, we have perused the joint venture agreement  which would reveal that there is nothing in that agreement  which would put the respondent under obligation to procure  component from the foreign collaborator or from M/s Tata  Advance Material Ltd. with whom the foreign collaborator had  an agreement.    It has already been stated in paragraphs  supra that the respondent was procuring only one component  from M/s PC USA.  Even if respondent was procuring certain  components from M/s Tata Advance Material Ltd. that had no  bearing on the price/value of the imported goods.  M/s Tata  Advance Material Ltd. were manufacturing the components  indigenously and had nothing to do with the imported  material.  Further, the mere fact that M/s PC USA had any  agreement with M/s Tata Advance Material Ltd. had nothing  to do with the price of the feed horn which was being supplied  by M/s PC USA to the respondent.  M/s Tata Advance Material  Ltd. were manufacturing some components indigenously,  namely, reflector and metal structure.  Therefore, the  Department’s case that the technical fees had influenced the  price of the goods imported is factually incorrect and baseless.   Mr. Shyam Divan, learned senior counsel, cited some  decisions.  He also relied on two decisions cited by the  respondent before the CESTAT which are: 1.      Dawwoo Motors India Ltd. vs.  Commissioner of Customs. New  Delhi , 2000(115) ELT 489 (T) and 2.      NEG Micon (India) Pvt. Ltd. vs.  Commissioner of Customs, Chennai  \026 2004(170) ELT 29 We have perused these two judgments.  In these two  judgments, it was clearly held that the technical know-how fee  and service fee if paid by the importer if it related to  manufacture of wind turbine generator in India and service  thereof and not in respect of parts/components imported by  them - license fee not payable as a condition of sale of  imported goods \026 License fee not satisfy the required  conditions under Rule 9(1)(c) of the Rules for being added to  the assessable value of the imported goods.   This apart, the Department has not advanced any  argument as to how the Tribunal erred in following their  earlier judgments on the identical issue.  When the law has  been laid down by the CESTAT itself in a number of earlier  judgments, it only followed the same in the facts and  circumstances of the present case.  Therefore, now it is not  open for the Department to persuade this Court to reverse the  order which is based on the earlier judgments of the CESTAT  wherein correct view has been taken by it. He also cited some judgments on Rule 9(1)(c) of  1988  Rules and on Section 14 of the Customs Act, 1962.   In Eicher Tractors Ltd. Haryana vs. Commissioner of  Customs, Mumbai, (2001) 1 SCC 315, this Court, in paragraph  6, held as under:

"6. Under the Act customs duty is chargeable on  goods. According to Section 14(1) of the Act, the assessment

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of duty is to be made on the value of the goods. The value  may be fixed by the Central Governemnt under Section  14(2). Where the value is not so fixed, the value has to be  determined under section 14(1). The value, according, to  Section 14(1), shall be deemed to be the price at which such  or like goods are ordinarily sold, or offered for sale, for  delivery at the time and place of importation- in the course of  international trade. The word "ordinarily" necessarily implies  the exclusion of "extraordinary" or "special" circumstances.  This is clarified by the last phrase in Section 14 which  describes an "ordinary" sale as one "where the seller and the  buyer have no interest in the business of each other and the  price is the sole consideration for the sale\005". Subject to  these three conditions laid down in Section 14(1) of time,  place and absence of special circumstances, the price of  imported goods is to be determined under Section 14(1-A) in  accordance with the Rules framed in this behalf."

In Commissioner of Customs, Mumbai vs. Bureau Veritas  & Ors. (2005) 3 SCC 265, this Court in paragraphs 17,18,20  and 21 held as under: "17. It is true that the Rules are framed under Section  14(1-A) and are subject to the conditions in Section 14(1).  Rule 4 is in fact directly relatable to Section 14(1). Both  Section 14(1) and Rule 4 provide that the price paid by an  importer to the vendor in the ordinary course of commerce  shall be taken to be the value in the absence of any of the  special circumstances indicated in Section 14(1) and  particularised in Rule 4(2).

18. Rule 4(1) speaks of the transaction value.  Utilization of the definite article indicates that what should  be accepted as the value for the purpose of assessment to  customs duty is the price actually paid for the particular  transaction, unless of course the price is unacceptable for  the reasons set out in Rule 4(2). "Payable" in the context of  the language of Rule 4(1) must, therefore, be read as  referring to "the particular transaction" and payability in  respect of the transaction envisages a situation where  payment of price may be deferred.

20. It is only when the transaction value under Rule 4  is rejected, that under Rule 3(ii) the value shall be  determined by proceeding sequentially through Rules 5 to 8  of the Rules. Conversely, if the transaction value can be  determined under Rule 4(1) and does not fall under any of  the exceptions in Rule 4(2), there is no question of  determining the value under the subsequent rules.

21. The scope for interference with findings recorded  by the Tribunal if it has kept in view the correct legal  position, has been dealt with by this Court in many cases.  The position was illuminatingly stated by this Court in  Collector of Customs, Bombay v. Swastic Woollens (P) Ltd.  and Ors, 1988 Supp SCC 796."

Learned counsel for the Department cited some  decisions.  However, the judgments cited by learned counsel  for the appellant are not applicable to the facts and  circumstances of the case and are distinguishable on facts  and on law and those cases have been decided on the peculiar  facts of those cases.

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In the instant case, we have elaborately considered the  entire facts and circumstances of the case with reference to  the agreement entered into between the parties and also  decided the case on the provisions of the Rules. In our opinion, the various contentions raised by the  Department, in the present case, are wholly devoid of any  merit.  In the result, the appeal stands dismissed.  However,  there shall be no order as to costs.