TaxTMI 
TaxTMI 
2008 (10) TMI 233
X X X X Extracts X X X X
X X X X Extracts X X X X
....Furnace Oil. M/s. IOCL would be importing, in terms of the Agreement between the appellant and IOCL, Furnace oil, which in turn, will be supplied to the appellants. In fact, there were Fuel Supply Agreement between IOCL and the appellant and in respect of each consignment imported and supplied to the appellants, there was a High Sea Sale Agreement. In other words, IOCL is the High Sea seller to the appellants. Initially, IOCL would issue a Provisional invoice indicating the cost of the fuel, insurance, freight, etc. for the purpose of payment of duty. However, later, they indicate the final invoice. The dispute in this case is that the appellants did not pay the full duty in terms of Section 14 of the Customs Act. Even though, the appellants paid the following charges to IOCL, they had suppressed that information and did not include the said charges to the assessable value. The charges are :- (1) Demurrage charges; (2) Bank charges; (3) facilitation charges; (4) Survey charges. As far as the present appeal is concerned, according to the Department, the maximum duty evasion is on account of the non-inclusion of the facilitation charges. Based on the intelligence that the appellants ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... stated that there is no condition of sale by the exporter that the payments are required to be paid to him before the sale of the goods either to IOCL or to the appellants. Therefore the said Rule 9(1)(e) of the Customs Valuation Rules could not have been invoked. He said that there is actually no condition of sale that these amounts have to be paid to the exporter for supply of the goods either to the appellant or to IOCL. He argued that each of these charges is not includible. Since the major differential duty confirmed is on account of the facilitation charges, lengthy arguments were adduced to show that they are not includible in the assessable value. He referred to Clause 5.1 of the Agreement dated 29-6-2001 between the appellants and IOCL which provides for payments to be made to IOCL. The same is reproduced below:- "For each import parcel that may be required by the Buyer, IOC shall issue High Seas Sale Invoice (Provisional) in Indian Rupees which will be worked out as per Clause No. 15 of the FSA dated 26-7-1999 executed by both the parties and considering the following elements:- (a) Provisional C&F price in US Dollars per MT as per IOC's contract with its overseas ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sampling to the appellants; vessels in compliance of the fuel supply contract; arrange for coordination for transfer of custody of the imported fuel through suitable arrangements; arrange for receipt and delivery of documentation regarding the offloading and supply of imported fuel; arrange for liaison import with respect to safety, speedy containment etc. and if requested by the appellant meet the representative of the appellant, the State Electricity Board or the operator of the appellant's product." He stated that a combined reading of the above clauses of the Agreement would show that the facilitation charges are in reality the extra cost incurred by IOCL on account of the supply being made to the appellants. He stated that these services have nothing to do with the price of the fuel and therefore, they cannot be included. He also referred to the statement of Shri C.K. Ravi, Senior Manager of the appellants, who in his statement dated 24-8-2005, has clarified that the facilitation charges includes a number of inland operations, which were not limited to:- (a) Liaisoning with the port authorities (b) Inspection of fuel with customs authorities (c) Facilitating unload....
X X X X Extracts X X X X
X X X X Extracts X X X X
....re - 2008 (228) E.L.T. 61 (Tri.-Bang.) = 2008 (87) RLT 63 (CESTAT-Bang.) (v) As regards Bank charges, the learned Advocate stated that bank charges are at the rate of 0.1% of the C&F value charged by the IOCL to the appellants to defray approximate expenses incurred by IOCL due to receipt of consideration from the appellants and making of payment to the foreign supplier and other allied activities. This is the normal practice and such charges cannot be said to be paid by the appellants as a condition of sale. It was submitted that the Tribunal, in the case of Exim India Oil Co. Ltd. v. CC (Port), Calcutta - 2001 (131) E.L.T. 207 (Tri.-Kolkata) has clearly held that bank charges cannot form part of the assessable value of the imported goods. That decision has been affirmed by the Hon'ble Supreme Court as reported in 2002 (143) E.L.T. A269 (S.C.). (vi) It was argued that the Survey fee paid at the rate of Rs. 10/- per MT to IOCL is not includible in the assessable value. The Commissioner has held that the same is includible as it was a part of the final price charged in respect of the imported cargo and it was a condition of sale for the imported goods. It was argued that the v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mported through a canalizing agent as per the Policy nor has IOCL acted as a canalizing agent. The appellants were otherwise free to import the goods on their own. There was no relationship of agent and principal between MMTC and Hyderabad Industries. In the present case, the terms of the agreement noted supra clearly points out to such an arrangement. The purchase of goods by MMTC was in bulk as a canalizing agent, whereas in the present case, the import is only for the appellants. Further, he stated that the Commissioner had relied on the decision of the Chennai bench in the case of CC v. Seven Seas Petroleum Pvt. Ltd. - 2005 (191) E.L.T. 1181 (Tri.-Chennai). He stated that this decision is also not applicable because in the Ispat Industries Ltd. case (cited supra), the Hon'ble Supreme Court has held that once CIF price is available, no further additions are permissible by applying the deeming provisions of Section 14 of the Customs Act. In the present case, the C&F price is available and therefore, the decision in the case of Ispat Industries would apply. Effectively this means that once the international price for the first import was available, this would require to be adopted....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh sea sales price was provisional. The department, on scrutiny of the declaration of the IOCL, that the high sea sale price was provisional, could have on its own motion called for the documents now being subjected to scrutiny and arrived at the same conclusion as in the impugned order at the time of finalization of Bill of Entry. This also would have helped the appellants to claim reimbursement of the entire duty payable for each parcel from the KPTCL. Having not done this, the Department is now seeking to take shelter by alleging suppression, mis-declaration and resorting to invocation of the longer period. Further, it was mentioned that the decision relied by the Revenue in the case of Seven Seas Petroleum was rendered after a difference of opinion which was resolved by the third member only on 7-1-2005. The imports in the present case being prior to that date, the longer period of limitation would not apply for this reason also. 6. The learned Departmental Representative stated that the Commissioner has considered the statutory provisions in terms of Section 14 read with Rule 4, Rule 9(1)(e) and 9(2) of the Valuation Rules in arriving at the conclusion that all the charges ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he ratio of the EXIM India Oil Co. Ltd. (cited supra) case relied on by the learned Advocate is not applicable, as in the instant case, payments are made as a condition of sale of the imported goods and the same constitutes the final price of the imported goods. In the case of EXIM India Oil, the payments were made to the bankers for the services provided by them for opening L/C. There is no dispute regarding the payment of bank charges, as the appellants have categorically agreed that the bank charges are charged by the IOCL as per the agreement. Thus the charges are includible in the assessable value of the imported goods, in terms of Rule 4 and Rule 9(1)(e) of the Customs Valuation Rules. 6.4 As regards the time bar, it was stated that the appellants had willfully mis-stated the price of the imported goods and suppressed the facts about the payment of actual final price based on the final invoice raised by the supplier M/s. IOCL. The appellants had not furnished relevant documents like various import agreements, final invoices and payment details to the Customs for the purposes of assessment of duty. They concealed vital information and documents from Customs and hence, suppr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upreme Court has decided that the service charges paid to the canalizing agents are includible in the assessable value. The learned Advocate has tried to distinguish the facts of the Hyderabad case from the present case. In our view, the fact that MMTC was a canalizing agent and the services charges were paid to the canalizing agent whereas in the present case, IOCL is not a canalizing agent, and that they had imported only for the appellant is not very very relevant. The Supreme Court has held that in the High Sea Sale Agreement, the service charges paid to the seller are includible. That is the ratio of the said decision. That is squarely applicable here. Moreover, we can definitely say that in terms of Rule 9(1)(e) of the Valuation Rules, the charges which have to be paid as a condition of sale of the goods are includible in the assessable value. On going through the Fuel Supply Agreement, it is very clear that the appellants have necessarily to pay the charges like facilitation charges, bank charges, demurrage and survey fees. For every parcel or consignment of import, these charges are invariably paid at the rate agreed to upon in terms of the Fuel Supply Agreement. This is a ....