Customs duty must be calculated on actual quantity received in shore tanks, not invoice quantities

CESTAT Bangalore set aside customs assessment orders regarding valuation of imported bulk liquid cargo. The tribunal held that actual quantity received in shore tanks should be basis for customs duty calculation, not quantity shown in import invoices and documents. Decision followed SC precedent in Mangalore Refinery case which established that actual quantity of crude oil received in shore tanks determines customs duty liability. Appeals were allowed with impugned orders being set aside due to lack of merit.

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Issues involved: Assessment of bulk liquid cargo based on import documents vs. actual quantity received in Shore Tank.

Issue 1: Assessment of bulk liquid cargo

The appeals were filed against Order-in-Appeal No.96/2012 and No.97/2012 passed by the Commissioner of Customs (Appeals), Cochin, concerning the assessment of Methanol imported by the appellants. The assessments were finalized based on the quantity shown in the imported documents, leading to a confirmation of differential duty. The main issue revolved around whether the quantity shown in the import invoices should be considered for assessment or the actual quantity received in the Shore Tank after import. The appellant argued that recent judgments and circulars have clarified that the quantity received in the shore tank should be the basis for assessment. The Revenue, however, supported the findings of the Commissioner (A).

Issue 2: Legal principles and judgments

The Hon'ble Supreme Court's judgment in the case of Mangalore Refinery and Petrochemicals Ltd. was cited, emphasizing that the taxable event for imported goods is the moment they cross into territorial waters and become part of the mass of goods within the country. The Court highlighted that the quantity of goods at the time and place of importation should be considered for valuation, as per Sections 13 and 23 of the Customs Act. The Tribunal's reasoning, based on a misreading of Section 14 of the Customs Act, was deemed unsustainable. Following the Supreme Court's ruling, the Board issued Circular No.34/2016, which clarified that the quantity received in the shore tank should be the basis for customs duty payment. This principle was upheld in subsequent Tribunal cases, leading to the conclusion that the impugned orders should be set aside, and the appeals allowed with consequential relief.

Conclusion

In light of the legal principles established by the Hon'ble Supreme Court and subsequent circulars, the Tribunal found no merit in the impugned orders regarding the assessment of bulk liquid cargo. Consequently, the impugned orders were set aside, and the appeals were allowed with any necessary consequential relief as per law.

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