Customs duty calculation clarified: Quantity in shore tanks key. Precedent followed. Additional duty included.

The Tribunal ruled that customs duty for Motor Spirit imports should be based on the quantity received in shore tanks, following a precedent set by the Supreme Court. The Tribunal also held that the additional duty under the Finance Act must be included in the basic customs duty for calculating Countervailing Duty. The appellant's claim was upheld, setting aside the previous order and allowing the appeal. The decision clarified the proper method for customs duty calculation in such cases.

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Issues Involved:
1. Whether customs duty on bulk liquid cargo imports of Motor Spirit (MS) is payable on the quantity received in shore tanks or on the transaction value based on the invoice price.
2. Whether additional duty of Rs. 2/- per litre under the Finance Act should be included in the basic customs duty for calculating Countervailing Duty (CVD) on imported petroleum products.

Summary:

Issue 1: Customs Duty on Bulk Liquid Cargo Imports

The primary issue was whether customs duty for Motor Spirit (MS) imports should be based on the quantity received in shore tanks or the transaction value from the invoice price. The appellant argued that this issue had already been settled by the Hon'ble Supreme Court in the case of Mangalore Refinery & Petrochemicals Ltd. - 2015 (323) ELT 433 (S.C), which held that customs duty is leviable on the actual quantity received in shore tanks. The Tribunal noted that the Supreme Court's judgment clarified that the levy of customs duty under Section 12 of the Customs Act applies only to goods imported into India, and the quantity for duty purposes should be the actual quantity received in shore tanks. Consequently, the Tribunal set aside the impugned order and allowed the appeal, affirming that customs duty should be based on the shore tank quantity.

Issue 2: Inclusion of Additional Duty in Basic Customs Duty for CVD Calculation

The second issue was whether the additional duty of Rs. 2/- per litre under the Finance Act should be included in the basic customs duty for calculating CVD. The Tribunal referred to its earlier decision in the case of Indian Oil Corporation Ltd. vs. C.C., Kandla, which followed the precedent set in Hindustan Petroleum Corporation Ltd. vs. C.C., Kandla - 2012 (384) ELT 534 (Tri-Ahmd.). The Tribunal held that the additional duty must be added to the basic customs duty for computing CVD. However, to ascertain the correct amount of CVD, the matter was remanded to the original authority.

Conclusion:

The Tribunal concluded that the appellant's claim of paying customs duty based on the shore tank quantity was correct and legal, while the revenue's claim of duty payment based on the invoice transaction value was not sustainable. The impugned order was set aside, and the appeal was allowed accordingly.

(Pronounced in the open court on 17.03.2023)

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