TaxTMI 
TaxTMI 
2019 (10) TMI 226
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.... by chartered vessels through the Paradeep Port located in the district of Jagatsinghpur, Odisha and Haldia Port in West Bengal. Such import into the country is assessed to Duty of Customs under Section 14 of the Act. 3. In exercise of powers conferred under Section 156 of the Act read with Section 14 thereof, the Government of India, Ministry of Finance-opposite party No. 1, promulgated the Customs Valuation (Determination of Value of Imported Goods) Rules, 1988 (for short, "Rules, 1988"), which was notified vide Notification No. 51/1988-Cus (N.T.) dated 18.07.1988. 3.1. While Section 14 of the Act and the Rules, 1988 were in force, the Ministry of Finance-opposite party No. 1, clarified vide its Circular F. No. 467/21/89-Cus.V : dated 14.8.1991 (Annexure-1) that post-dispatch money would not constitute elements of value since element for the carriage. 'Demurrage' and 'dispatch' money being in the nature of penalties or rewards by virtue of a contracted character agreement between the carrier and character and this in no way could be conceived as being part of the freight or for that matter part of the price actually paid or payable for the goods. Hence, '....
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....ircular No. 5/2006-Cus. : Dated 12.01.2006 clarifying therein that demurrage charges are not included as a part of assessable value under Section 14 of the Customs Act, 1962, for imports prior to 02.03.2001, i.e. the date of issue of circular vide Annexure-2. 4.2. Subsequently, Ministry of Finance- Opposite Party No. 1, vide Circular No. 26/2006-Cus. : Dated 26.09.2006 (Annexure-4) clarified that pending assessment after 02.03.2001 should be finalised by including ship demurrage charges in the assessable value of the imported goods. 5. Under Section 14 of the Act, as was in force till 09.10.2007, duty of customs was chargeable on the 'deemed price' of the imported goods. As against above provision in the Act, the Rules, 1988 as was in force during the above period, provided that the value of the imported goods for assessment to duty shall be "transaction value". In order to overcome the practical difficulties faced due to inherent contradiction between 'deemed price' in Section 14 of the Act and 'transaction value' as referred to in the Rules, 1988, Section 14 of the Act was amended by the Finance Act, 2007, with effect from 10.10.2007. Simultaneously,....
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.... In compliance of such directions of Opposite Party No. 3, the Petitioner confirms with the overseas supplier/charter about the ship demurrage charges, as applicable to the respective vessels and thereafter submit such details to the Deputy Commissioner of Customs, Paradeep Port-Opposite Party No. 3, who then finalizes the provisional assessment of the respective bills of entries by including ship demurrage charges to the transaction values of the respective consignment for computation of duties of customs payable thereon, but without granting any benefit/concession in valuation of the consignment in respect of which the Petitioner-Company earns 'dispatch money' as reward/incentives. 7. Under the above circumstances, such goods imported by the petitioner under one purchase order, delivered by the suppliers through a number of vessels over a period of time, got assessed to duties of customs computed on different assessable value purely on account of inclusion of demurrage charges which varies from vessel to vessel contingent upon detention of the vessels either in the port of importation or on the high seas for various reasons such as congestion, non-availability of berth....
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....time and place of importation or exportation, as the case may be, in the course of international trade, where- (a) the seller and the buyer have no interest in the business of each other; or (b) one of them has no interest in the business of the other, and the price is the sole consideration for the sale or offer for sale. Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50. (1A) Subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. (2) Notwithstanding anything contained in sub-section (1) or sub-section (1A), if the Board is satisfied that it is necessary or expedient so to do if may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such....
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....rt as the case may be, is presented under section 50. (2) Notwithstanding anything contained in sub-section (1), if the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. Explanation - For the purposes of this section- (a) "rate of exchange" means the rate of exchange. (i) determined by the Board, or (ii) ascertained in such manner as the Board may direct, for the conversion of India currency into foreign currency or foreign currency into Indian currency; (b) "foreign currency" and "Indian currency" have the meanings respectively assigned to them in clause (m) and clause (q) of Section 2 of the Foreign Exchange Management Act, 1999 (49 of 1999.) 10. Subsequent to amendment of the Customs Act, 1962, corresponding Rules also amended. Petitioner also provided a comparative chart of amendment of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988....
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....alue, there shall be added to the price actually paid or payable for the imported goods. (2) For the purposes of sub-section (1) of Section 14 of the Customs Act, 1962 (52 of 1962) and these rules, the value of the imported goods shall be the value of such goods, for delivery at the time and place of importation and shall include- (a) the cost of transport of the imported goods to the place of importation; (b) loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation; and (c) the cost of insurance; Provided that- (i) where the cost of transport referred to in clause (a) is not ascertainable, such cost shall be twenty per cent of the free on board value of the goods; Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods. (ii) the charges referred to in clause (b) be one per cent of the free on board value of the goods plus the cost of transport referred to in clause (a) plus the cost of insurance referred to in clause (c). (iii) where the cost referred to in....
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....f any, to be fulfilled before such detention and confiscation and the information, notices and security to be given and the evidence requisite for the purposes of such detention or confiscation and the mode of verification of such evidence. (e) the reimbursement by an informant to any public officer of all expenses and damages incurred in respect of any detention of any goods made on his information and of any proceedings consequent on such detention.; (f) the information required in respect of any goods mentioned in a shipping bill or bill of export which are not exported or which are exported and are afterwards re-landed; (g) the publication, subject to such conditions as may be specified therein, of names and other particulars of persons who have been found guilty of contravention of any of the provisions of this Act or the rules. (h) the amount to be paid 3 (for compounding and the manner of compounding) under sub-section (3) of Section 137." 11.1. Hon'ble Supreme Court in the case of Rasiklal Kantilal & Co. vis. Board of Trustees of Port of Bombay, reported in 2017 (348) ELT 3 (SC), held as under: "24. The dispute in this cas....
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.... "2. The assessee in these appeals is M/s. Mangalore Refinery and Petrochemicals Limited. It had imported 94204.425 MTs (ullage quantity measurement of vessel) of Crude Oil vide Bill of Entry No. 0924, dated May 23, 2001 and warehoused the same into their shore tanks. The same was cleared under provisional assessment by executing P.D. Bond, pending production of original documents by the assessee and reply to further queries by the Department. The provisional assessment was taken up formalization based on this Court's decision which upheld the order passed by the CEGAT in the case of M/s. HPCL and M/s. NOCIL, wherein it was held that customs duty should be levied on the quantity that is pumped into the shore tanks in terms of Board's Circular No. 96/2002 :, dated December 27, 2002. The shore tank quantity of Crude Oil is considered as the relevant quantity for the purpose of assessment. On scrutiny of the documents filed by the assessee, it was found that Bill of Lading quantity was taken as the Cost & Freight (FOB) component of the relevant value for assessment as per Section 14 of the Customs Act, 1962. Therefore, irrespective of the fact whether there is shortag....
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....of importation or exportation, as the case may be, in the course of international trade, where- (a) the seller and the buyer have no interest in the business of each other; or (b) one of them has no interest in the business of the other, and the price is the sole consideration for the sale or offer for sale; Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50. (1-A) Subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. (2) Notwithstanding anything contained in sub-section (1) or sub-section (1-A), if the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable w....
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....r export or imported goods, to the extent that such value has not been included in the price actually paid or payable, namely:- (i) Materials, components, parts and similar items incorporated in the imported goods; (ii) Tools, dies, moulds and similar items used in the production of the imported goods; (iii) materials consumed in the production of the imported goods; (iv) Engineering, development, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods; (c) Royalties 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 royalties and fees are not included in the price actually paid or payable. (d) The value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues, directly or indirectly, to the seller; (e) all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisf....
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....sions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf. Provided further that the rules made in this behalf may provide for, the circumstances in which the buyer and the seller shall be deemed to be related; (ii) the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case; (iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section. Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50. (2) Notwithstanding anything contained in su....
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....y principle of "transaction value" even under the old provision. No doubt, as per this provision existing today generally the price mentioned is to be accepted as it is the transaction value. However, this very provision stipulates the circumstances under which that price can be discarded. In any case, having regard to the question with which we are concerned in the present appeals, such a change in the provision may not have much effect. Xx xx xx (24) In contrast, in the unamended Section 14, we had provision like sub-section (1A) which stipulated that the price referred to in sub-section (1) in respect of imported goods shall be determined in accordance with rule 6 made in this behalf. Therefore, rules can be made in determining the price. However, these rules have to be subject to the provisions of sub-section (1), the underline principle whereof, as stated above, is to taken into consideration actual price of the goods unless it is impermissible because of certain circumstances stipulated therein. Keeping in mind this fundamental aspect, we have to examine the scheme of the Valuation Rules, 1988." 11. In respect of the explanation, which travels beyond the ....
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....007 travelling beyond the scope of the Act is bad in law and hence deserves to be declared as ultra vires. 12. Learned Counsel for the opposite parties tried to justify the amended provisions on the ground that the amended provisions emphasized the words "imported goods shall include in addition to the price" as under Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commission and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in his behalf." 12.1. In this regard, judgment of the Hon'ble Supreme Court in the case of Garden Silk Mills Ltd. vs. Union of India, reported in 1999 (113) E.L.T. 358 (SC) was relied, wherein it has been observed as under: "15. The question as to whether the import is completed when the goods entered the territorial waters and it is the value at that point of time which is to be taken into consideration is no longer res i....
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....IF contract. In other words the submission was that the landing charges are already included in the CIF value of the goods as they form part of the freight paid to the steamer agent and the said charges are recovered by the Port Trust authorities directly from the steamer agents and, therefore, a second inclusion of such landing charges by loading a flat percentage of the CIF value is uncalled for. In this connection, reliance was placed on clause 15 of the terms and conditions of a sample of a Bill of Lading which deals with loading, discharge and delivery and reads as under: any expenses, costs, dues and other charges which incur before loading and after discharge of the goods shall be borne by the Merchant. Learned Additional Solicitor General is correct in submitting that the aforesaid clause 15 does not in any way indicate that the CIF value includes therein the charges levied by the Port Trust. Authorities after the discharge of the goods. It is difficult to imagine that at the time when the contract is entered into, and the CIF price is, fixed, as to how the parties could envisage as to what the port charges at the destination are likely to be. It does appe....