TaxTMI 
TaxTMI 
2024 (12) TMI 542
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....PTA, PRESIDENT HON'BLE MR. P. V. SUBBA RAO, MEMBER ( TECHNICAL ) Shri B.L. Narasimhan, Ms. Jyoti Pal, Ms. Anjali Singh, Advocates for the Appellant Shri S.K. Rahman, Authorised Representative for the Respondent ORDER P. V. SUBBA RAO : 1. M/s. IPM India Wholesale Trading Private Limited Appellant filed these 70 appeals to assail the Order-in-Appeal Impugned order dated 30.6.2022 passed by the Commissioner (Appeals) whereby he rejected the appellant's appeals against 70 self-assessed Bills of Entry. 2. It needs to be pointed out that as per the decision of the Supreme Court in ITC Ltd. vs. Commissioner of Central Excise, Kolkata-IV 2019 (368) ELT 216 (SC) an importer can also file an appeal against its self-assessed Bill of Entry before Commissioner (Appeals). If the importer self-assesses more duty than is due and pays it, it cannot file an application for refund and it has to first appeal against its self-assessed Bills of Entry. 3. The appellant imports and sells cigarettes. It imported MARLBORO GOLD brand cigarettes manufactured by Philip Morris Philippines Manufacturing Inc. PMPI from Philip Morris Products S.A. Switzerland PMPSA. According to the appell....
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....pellant made the following submissions: (i) The appellant imports and sells cigarettes in India. During the period to March to June, 2020 it had imported cigarettes from PMPSA which supplied the cigarettes manufactured by PMPI, Philippines but the cigarettes were sent from Philippines directly to India; (ii) For this purpose, the appellant had entered into a distribution agreement with PMPSA according to which the cigarettes were to be supplied at carriage and freight (CFR) (also known as carriage paid to CPT) basis. The distribution agreement was supplemented by a price list dated 27 May, 2020 which indicated the price of the cigarettes on CPT basis. Although the price included both the cost of the cigarettes and the carriage up to the place of delivery, i.e. is Delhi, it was their understanding that they will be sent by ship. Due to disturbances in the shipping routes during COVID pandemic, the appellant had insisted for import of the goods by air; (iii) Since the air freight was much higher than the sea freight, the appellant paid an additional amount towards the air freight treating the price agreed to on CFR basis as the cost of the cigarettes only i....
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....nder 'Misc. Charges' in the Bill of Entry; (d) In the invoice, the Incoterm (International commercial terms) mentioned is CPT New Delhi and CPT means 'Carriage Paid To'. Thus, the invoice value includes cost of transportation upto New Delhi. In the invoice "Add. Recov. Freight" is shown and added to the assessable value. A comparison of the Bills of Entry and invoice in one case shows as follows : Description in invoice Amount in Rs. Amount mentioned against declared column in B/E MARLBORO GOLD 6,96,540.00 Inv. Val (Invoice value) Add. Recov. Freight 9,53,386.56 Misc. charges Total Value 16,49,926.56 Ass. val (Assessable value ) (e) The invoice was raised by PMPSA which sold goods manufactured by PMPI and shipped them to the Appellant; (f) The country of origin of the goods was Philippines; (g) The airway bills did not show the amount of freight but it only stated that freight was 'prepaid' and 'as agreed'; (h) The Commissioner (Appeals) stated that "FOB value of impugned goods was not available" and "no documentary evidence has been produced to substantiate this contention". (i) In its appeal....
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....ndia; (r) Without prejudice to the above, relying upon the documents submitted by the appellant, it appears that the invoice is raised from Philippines to Switzerland and then, from Switzerland to India; (s) In the invoice it is mentioned that "Payment to the account of Philip Morris products. SA, London, England." Thus the payment towards this amount is going to PMPSA ENGLAND and not PMPSA (Switzerland) . To that extent the appellant's submissions that "...goods were supplied by PMPSA Switzerland to the Appellant and the very same additional freight amount (INR 9,53,386.56) was recovered from the Appellant" is wrong; (t) The value of goods mentioned in the invoice as " CPT New Delhi" is inclusive of freight The freight is not separately shown and hence the appellant's claim that total freight in the invoice has exceeded 20% is wrong; (u) Article 4.1 of Distribution Agreement says that PMPSA shall sell the products to IPM at prices agreed by the parties from time to time. The Price List dated 27-05-2020 publishes the CFR prices w.e.f 01-05-2020. No mention of such publication of prices in Distribution agreement. Hence, the price list cannot be re....
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....s the additional cost of air freight. 13. The Commissioner(Appeals) did not agree with the submissions of the appellant for the reason that the FOB value of the goods was not available and neither was the actual amount of freight paid to the airlines for transporting the cigarettes available. The relevant portions of the order is reproduced below: "5.3. The core issued in this case is to be decided whether the additional freight as claimed to have been incurred on imports by Air instead of sea is includible in assessable value in excess of 20% of FOB value? 5.4. At outset, I note that FOB value of impugned goods is not available in the instant case. The Appellant has contended that their normal practice had been to declare value on CRF basis. Further, they have contended that 'CFR' value is invariably higher than FOB value and thus 'Air freight' can be limited to 20% of CFR in terms of Rule 10(2) of CVR 2007. However, I find that no documentary evidence has been produced to substantiate this contention. There is no documentary evidence to establish that value (excluding Add. Recov. Freight) corresponds to 'CFR' value. For reference, a sample invoice no. 1066201....
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....case. 5.5 The Appellant has relied upon case of M/s 3M India Ltd. [2006(198) ELT 545 (T- Bang.)] in support of their claim. However, I note that in 3M case, the FOB value could be arrived at by deducting freight & insurance amount shown separately. In present case no such details are available and thus FOB cannot be worked out to apply Rule 10 of CVR 2007. Thus the relied upon case is distinguishable. 5.6. In view of the above, the assessments in the impugned Bills of Entry need not be altered in given circumstances." 14. Learned authorised representative for the Revenue supports the impugned order. His first assertion is that none of the documents show the FOB value of the goods and none of the documents, including the Airway Bill indicate, how much freight was actually paid to the airlines. The Airway Bill only mentions "freight as agreed". The amount of freight is not ascertainable and therefore the fifth proviso to rule 10(2) (a) does not apply to this case. 15. His second submission is that as per article 4.2 of the Distribution Agreement between the appellant and its supplier, "The terms of sale and delivery for all shipments of the Products shall be C....
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.... standi to say whether they should be agreed to between them through price lists or in any other manner. 21. Another submission of the learned authorised representative of the Revenue is that since para 4.2 of the Distribution Agreement refers to sale on CFR New Delhi Airport, any price agreed to between the parties should be taken as price for sale including air freight up to Delhi. Therefore, the additional amount paid cannot be on account of freight. For the sake of clarity, we reproduce the relevant portion of para 4.2 below: "4.2 Shipping Terms. The terms of sale and delivery for all shipments of the Products shall be CFR New Delhi airport, JNPT Nhava Sheva Port-Mumbai or another port in Mumbai (Incoterms 2000)or as the parties may otherwise agree from time to time. The method and route of shipment for all shipments of Products shall be as directed by IPM. Unless otherwise agreed in relation to any particular shipment, title to the Products shall transfer to IPM simultaneous with risk in accordance with the relevant incoterm. PMPSA shall invoice IPM upon shipment of the Products." 22. This clause also says "or as agreed to by the parties". The Distribution Agree....
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....udable in the assessable value. 25. Learned counsel for the appellant has also produced before us a price list dated 28 May, 2020 for the period and another price list dated 12 August, 2020 for later period. The second price list shows the FOB value per unit as Rs. 635.29. During the relevant period, the CPT value per unit is indicated as Rs. 696.54 which is only slightly higher than the FOB value for the subsequent period. Based on these documents, we are satisfied that the CPT values for the relevant period were for transport by ship or rail. Air transport is far more expensive. 26. Now we have to examine whether the contention of the appellant that the amount shown in the invoices as 'Add.Recov.Freight' is the cost of air freight is correct or to accept the contention of the Revenue that it is not for air freight. 27. If we accept the contention of the appellant of "Add. Recov.Freight", only an amount equal to 20% of the FOB value can be included in the assessable value and duty has to be re-determined. 28. If we accept the contention of the Revenue that it is not towards air freight and air freight has already been included in the CPT price, then, this amount cannot....