2007 (12) TMI 336 - AT - Customs

Tribunal excludes barging charges from assessable value, allows importers' appeal

The Tribunal held that the barging charges incurred by the importers for transporting goods from the ship at anchorage to the jetty should not be included ... Valuation - includibility - whether “barging charges” i.e. cost of transportation of goods from anchorage of vessel to jetty (place of unloading notified under Section 8(a) of the Customs Act) was to be included in the assessable value of the goods under Rule 9(2) of the Customs Valuation Rules, 1988 read with Section 14 of the Customs Act? Issues Involved:1. Whether 'barging charges' should be included in the assessable value of goods under Rule 9(2) of the Customs Valuation Rules, 1988, read with Section 14 of the Customs Act.Detailed Analysis:1. Inclusion of Barging Charges in Assessable Value:The primary issue was whether the cost of transporting goods from the anchorage of the vessel to the jetty (barging charges) should be included in the assessable value of the goods. This issue arose due to conflicting views from previous cases: Reliance Industries Ltd. v. Commissioner of Customs and Essar Oil Ltd. v. Commissioner of Customs.Case Background:The appellants imported four consignments of fertilizer from the USA in 1999. Due to insufficient draft at the jetty, the ships anchored a few nautical miles away, and the cargo was ferried to the jetty by barges. The cost of this transportation (barging charges) was incurred by the importer but was not included in the assessable value of the goods in the Bills of Entry. The Customs authorities added these charges during the final assessment, leading to a demand for differential duty, which the appellants paid under protest and subsequently sought a refund.Appellants' Arguments:- The appellants argued that the barging charges were part of stevedoring and thus not subject to customs duty, referencing the Stevedoring and Handling Agreement and Board's Circular No. 80/2002-Cus.- They contended that these charges were already covered by the landing charges (1% of CIF value) included in the assessable value under Rule 9(2)(b) of the Customs Valuation Rules.- They cited the Supreme Court's decision in Ispat Industries Ltd. v. Commissioner of Customs, which held that barging charges should not be included in the assessable value.Revenue's Arguments:- The Revenue relied on MF(BR) Circular No. 29/2004-Cus, which stated that landing charges collected as 1% of CIF value were for loading, unloading, and handling at the place of importation, and additional charges for transportation from anchorage to landmass should be included in the assessable value.- They argued that the place of importation was the jetty, not the anchorage, and thus the cost of transportation from the vessel to the jetty should be included in the assessable value.- The Revenue distinguished the appellants' case from Ispat Industries by noting that in the latter, the freight was paid up to the jetty, whereas in the present case, it was paid only up to the anchorage.Tribunal's Findings:- The Tribunal examined the facts and found that the anchorage points were outside the Customs area notified under Section 8 of the Customs Act.- The Tribunal noted that the goods were unloaded from the vessels into barges at the anchorage with the permission of the proper officer of Customs, and the duty was assessed and paid at that point.- The Tribunal referred to the Supreme Court's judgment in Ispat Industries, which held that additional transportation charges due to extraordinary situations (like lack of draft at the jetty) should not be included in the assessable value.- The Tribunal found that the cost of transportation from the foreign port to the Indian port had already been included in the price paid by the appellants under the CIF contract, and further addition of barging charges was not permissible under Rule 9(2)(a) of the Customs Valuation Rules.Conclusion:The Tribunal concluded that the barging charges incurred by the appellants for ferrying the goods from the ship at anchorage to the jetty should not be included in the assessable value of the goods. The decision of the lower authorities to include these charges was set aside, and the appellants' appeal was allowed. The appellants were entitled to claim a refund of the differential duty, subject to proving that there was no unjust enrichment.Operative Part:The operative part of the order was pronounced in open court on 10-12-2007, with the referred issue answered in favor of the appellants.