TaxTMI 
TaxTMI 
2024 (4) TMI 47
X X X X Extracts X X X X
X X X X Extracts X X X X
....tive part of this order is as follows: a) In terms of Section 18 of the Customs Act, 1962, I finalise the provisional assessment of the said Shipping Bills as detailed in the Annexure to this Order and demand Customs duty of Rs. 1,27,380/- (Rupees One Lakh Twenty Seven Thousand Three Hundred Eighty only) from M/s The Kutch Salt and Allied Industries Ltd., as detailed in Part A of the Annexure to this Order. b) I demand the differential Customs Duty of Rs. 41,89,834/- (Rupees Forty One Lakhs Eighty Nine Thousand Eight Hundred Thirty Four only) on the Exporter The Kutch Salt and Allied Industries Ltd., as detailed in Part B of the Annexure to this order under Section 28(4) of the Customs Act, 1962. c) I demand interest at applicable rates on the amounts mentioned at (a) & (b) above, under Section 28AA of the Customs Act, 1962. d) The total quantity of Iron Ore fines exported vide the said three shipping bills, totally valued at Rs. 18,83,87,742/- is held liable for confiscation under Section 113(i) of the Customs Act, 1962. However, since the said Iron Ore is not available for confiscation, I refrain from actual confiscation and consequently I do not impose redemption fine in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reight upto the port indicated therein but not the transit insurance. 5. The exporter then chartered vessel M.V. Great Praise from a Singapore Company to export the goods and filed 3 shipping bills for the purpose. The goods covered by all the 3 shipping bills were exported in this vessel. It declared the value of the export goods on provisional basis because as per its agreement with the buyer, the final price could be determined only on the test report, after the goods reached the destination. 6. The Department also drew samples of the iron ore fines and tested them in the Customs House Laboratory at Visakhapatnam. The case of the assessee is that after the goods were exported, they were tested by the Testing Agency CIQ, whose report was agreed to between the buyer and the seller and the final price was determined and the final commercial invoice was issued in terms of the agreement taking into consideration the test report of M/s CIQ. Learned Counsel for the appellant has taken us through the final commercial invoice placed at page 76 of the appeal book which indicates the total weight of the iron ore fines as 49,700 (WMT) and 45,351.250 (DMT). The amount in US$ is indicated a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not be charged on any notional FOB value but has to be charged on the original FOB value. As far as the addition of US$ 10 per MT is concerned, Learned Counsel submits that unlike the Customs Valuation (Determination of Value of Import Goods) Rules 2007 Import Valuation Rules which provide for addition of commission to the transaction value, the Export Valuation Rules do not provide for any such addition. He also submits as per the statements given by the appellant during investigation the appellant was not even aware for the amount being paid by the buyer to an agent based in Hong Kong to charter the vessel. Therefore, he prays that the demand is not sustainable and may be set aside with consequential relief to the appellants. 10. Learned AR for the Revenue relies on the impugned order. He further asserts that when there are two conflicting test reports, the test report of the Government Laboratory cannot be ignored in favour of private test report. He relies on the judgments of the Supreme Court in M/s Aban Loyd Chiles Offshore Ltd., Vs Union of India [2008 (227) ELT 24 (SC)] where it has been held as follows: ".....The doctrine of incorporation also recognises the position th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....buyer and seller? b) Can the US$ 10 per MT be added as additional consideration for sale in the case? 14. Duties of Customs are levied on the goods imported into India or exported from India as per section 12 of the Customs Act, 1962 Act at the rates specified in the schedules to the Customs Tariff Act, 1975. These duties can be based on quantity (specific rate of duty) or value (ad valorem rates of duty). If duties are to be levied on the value, such value shall be determined as per section 14 of the Act and the Valuation Rules. Section 14 reads as follows: "14. Valuation of goods.-(1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specifi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ided for in this rule." 17. The Customs Export Valuation Rules, however, do not provide for adding any commission to the value of the goods. Rule 3 of these Rules reads as follows : Rule 3. Determination of the method of valuation. - (1) Subject to rule 8, the value of export goods shall be the transaction value. (2) The transaction value shall be accepted even where the buyer and seller are related, provided that the relationship has not influenced the price. (3) If the value cannot be determined under the provisions of sub-rule (1) and sub-rule (2), the value shall be determined by proceeding sequentially through rules 4 to 6. 18. Thus, the distinction between the imports and exports valuation in so far as it pertains to addition of commissions in Section 14 is reflected in the corresponding Valuation Rules. We now proceed to decide the two issues before us: Redetermining the transaction value based on the test report of CRCL instead of the test report of CIQ 19. To examine this re-determination in the impugned order, we need to examine as to what is transaction value. Transaction value is the price paid or payable by the importer(buyer) to the exporter (seller)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmine the nature of the goods or if the availability of the exemption notification depended on the Fe content of the export goods, etc. Then, the customs officers can rely on the CRCL's test report. Thus, the impugned order re-determining the transaction value based on the CRCL test report is not correct and cannot be sustained. 22. The decision of this tribunal in Kimmi Steels upheld by the Supreme Court has been relied on by the Revenue. That case was completely different although the goods were iron ore fines in that case as well. During the relevant period in that case, export duty was chargeable on weight with a partial exemption notification if the Fe content was below a certain threshold. There were conflicting test reports regarding the Fe content and in the absence of clarity regarding the entitlement to the exemption notification, it was denied. 23. We answer this question in favour of the exporter and against the Revenue. Addition of US$ 10 per MT paid by the overseas buyer to M/s. Reliance, Hongkong as commission 24. As is evident from the proviso to sub-section (1) of Section 14 and the Export Valuation Rules, unlike in case of import valuation, Commissions paid c....