2023 (11) TMI 379 - AT - Customs

Tribunal Rules Demurrage Charges Excluded from Steam Coal Customs Valuation, Aligning with Orissa HC Decision.

The Tribunal determined that demurrage charges should not be included in the assessable value of imported 'Steam Coal' under the Customs Act, 1962. Citing ... Valuation of imported goods - inclusion of demurrage charge in the assessable value of the immovable goods - HELD THAT:- The issue has been decided by the Hon’ble Orissa High Court in the case of TATA Steel Ltd. [2019 (10) TMI 226 - ORISSA HIGH COURT] wherein the Hon’ble court held that it was beyond the legislative power to include it in the Rules is accepted and thus the explanation to sub-rule-(2) of Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is held to be bad and hence declared ultra vires the Constitution/provision of Section 14 of the Customs Act, 1962, and hence the same is struck down. Thus, the demurrage charges is not includable in the custom valuation of imported goods for the purpose of charging custom duty - the impugned order is set aside - appeal allowed. Issues involved: Whether demurrage charges should be included in the assessable value of imported 'Steam Coal'.Summary:The issue in this case was whether demurrage charges paid by the appellant should be included in the assessable value of imported 'Steam Coal'. The appellant argued that based on the decision of the Hon'ble Orissa High Court and CESTAT New Delhi, demurrage charges should not be included in the assessable value. The Revenue, on the other hand, reiterated the findings of the impugned order and mentioned that an appeal against the Orissa High Court judgment was pending before the Hon'ble Supreme Court.Upon careful consideration, the Tribunal referred to the Orissa High Court judgment in the case of TATA Steel Ltd., which held that demurrage charges cannot be included for the purpose of valuation under the Customs Act, 1962. The Tribunal also noted the decision of the Delhi bench of the Tribunal in the case of Vinyl Chemicals (India) Ltd., which followed the Orissa High Court judgment and held the explanation of Rule 10(2)(a) of the Customs Valuation Rules, 2007 to be ultra vires Section 14 of the Customs Act. Therefore, the Tribunal concluded that demurrage charges are not includable in the custom valuation of imported goods for the purpose of charging custom duty.Regarding the pendency of the revenue's appeal against the Orissa High Court judgment, the Tribunal observed that no stay had been granted by the Hon'ble Supreme Court, thus the finding of the High Court judgment was in force. Consequently, the impugned order was set aside, and the appeal was allowed.The judgment was pronounced in the open court on 06.11.2023.