TaxTMI 
TaxTMI 
2025 (4) TMI 834
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....to be use dcaptively. The Appellant had imported 10 consignments of coal by gearless vessels, which in the absence of sufficient draft at the Bedi Port jetty, were anchored at the anchorage within the Bedi Port. At the anchorage point, the coal was unloaded from the mother vessel to the barges by utilizing the services of floating cranes from M / s United Shippers Ltd., Mumbai and Essar Bulk Terminal. For hiring of floating cranes, the appellant agreed to pay Rs.85/MT inclusive of all expenses to M / s United Shippers and Rs.90/MT to Essar Bulk Terminal. 3. For transporting of the coal from the anchorage point to the jetty, the barge charges were fixed and these charges were treated as cost of transportation of imported coal apart from the sea freight payable to the ship owners by the department the cost of unloading of coal from the 10 mother vessels to the barges was treated as part of transportation of goods because if vessel was equipped with a crane, the same would have been done by the vessel itself. The charges paid thus, as per department were distinct from unloading, loading and were paid as transportation charges and hence includible in assessable value. 4. At the t....
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....n be made. Reliance in this regard was placed on the following judgments: • Coromondal Fertilisers Ltd. vs Collector of Customs 2000 (115) ELT. 7(S.C.) • Wipro Ltd. vs Assistant Collector of Customs 2015 (319) ELT. 177 (S.C.) • Ispat Industries vs. Commissioner of Customs, Mumbai 2006 (202) ELT 561 (S.C.) • Reliance Industries vs Commissioner of Cus. (Prev.) Ahmedabad 2004 (174) ELT. 344 (Tri-Mumbai) • Commissioner of Customs, Visakhapatnam vs. Hy Grade Pellets Ltd. 2007(211) ELT. 289 (Tri-Banglore) • Tata Yodogawa Limited vs Commissioner of CEX. and Cus, Bhubaneswar 2001 (131) ELT. 583 (Tri-Kolkata) 10. The Appellants submitted that the provisions of Section 18(2) of the Customs Act,1962 under which the differential duty is recoverable after finalization of provisional assessment and those of Section 28 and in particular of Section 28(4) ibid are mutually exclusive. The relevant date in terms of the Explanation in case of provisional assessment is when any short levy or non-levy is detected after adjustment of duty as a consequence of final assessment under Section 18 of the Customs Act, 1962. The pro....
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.... • CCE Vs. Raja Impex Pvt. Ltd. reported in 2008 (229) ELT 185 (P&H); • CCE Vs. Finesse reported in 2009 (248) ELT 122 (Bom) as upheld by theSupreme Court as reported in 2010 (255) ELT A120-SC; • Commissioner of Customs Vs. Sudarshan Cargo reported in 2010 (258) ELT 197 (Bom). 12. It was further submitted that the present case, there was neither a bond nor goods were available for confiscation. Further, this was not a case of provisional release of the goods where the goods are first seized and then released on execution of bond wherein the importer undertakes to produce the goods as and when required but a case where the goods were never available for confiscation right from the time the investigations started. In view of this, the case laws relied upon by the original authority are inapplicable and the impugned order imposing redemption fine of Rs. 2.5 lacs is totally untenable and liable to be set aside. 13. The Appellant submitted that if no differential duty is required to be paid by the Appellant under Section 18(2) of the Customs Act, 1962 as the floating crane charges are not required to be included in the assessable value, there is no....
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....ut an extended element of freight and the same is liable to be included in the assessable value. It is also find that on introduction of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 on 10.10.2007, all the earlier decisions given by the appellate authorities in respect of barge charges and related other matters, are irrelevant for the period on or after 10.10.2007. As in Explanation to Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 clearly mentions that the Barge charges are includible the transport cost of imported goods. The text of relevant provisions of law is mentioned below: Rule 10 (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: Pr....
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....ion of the noticee is that the assessable value of the goods is CIF value which includes Cost, Freight and Insurance hence the cost of floating charges as part of Freight which is already included in the CIF value and they have already paid the duty on CIF value hence no demand is required. I find that the contention of the noticee is not acceptable as the cost of Floating charges is paid by them and not paid by the supplier of the goods. Further, against this cost they have paid the less freight in comparison to the freight of geared vessel as stated in the statement of Shri Vinay Ramanlal Shah, Managing Director of noticee company recorded on 02.09.2013. Hence, this cost of Floating charges is also includable in the CIF value of the imported goods and liable for payment of customs duty. 03.03.02. The contention of the noticee that floating crane charges is part of loading and unloading charges as it is a duty of importer to make arrangement for lightarge the vessel from acnchorage point. I find that the contention of the noticee is not proper and legal as the noticee himself has contended that when the vessel comes at anchorage point it is duty of importer to lightarage ....
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....terms of Rule 9(2)(a) of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (now Rule 10(2)(a)] Relying on the decision rendered in the case of Reliance Industries Ltd. v. Commissioner 2004 (174) E.L.T. 344 (Tribunal) the department's appeal was rejected by Hon'ble Tribunal. This judgment was also affirmed by the Apex court as reported at 2008 (225) E.L.T. 337 (S.C.). I find that the facts and circumstances mentioned in the case cited by the noticee are on prior to introduction of new Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Hence, the same is not applicable in the present case as explanation under Rule 10 ibid (earlier Rule 9 of erstwhile valuation rules )was not inserted at material time. 03.03.05. It is also submitted that certain inferences have been drawn only on presumption in the SCN. For example, it has been inferred under paragraph 8 of the notice that the floating crane charge is nothing but an extended cost of freight. However, the notice does not quote any authority in support of such conclusion. I find that the director of noticee company himself stated that the floating crane charge is nothing but....
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.... para supra, question of confiscation imported goods under Section 111(m) of the Act, ibid automatically does not survive. I find that it is established that the floating crane charges is nothing but an extended part of freight and the same is liable for included in the assessable value. I also find that it is already held that the floating crane charges are liable for inclusion of transport cost of imported goods and the same is a part of assessable value. Ongoing through Section 111(m) of the Customs Act, 1962, it is observed that if any goods which do not correspond in respect of value or any other particular with the entry made under this Act, then the goods are liable for confiscation. The commission/omission on the part of the noticee, i.e., mis- declaration in respect of value of goods in the bills of entry is squarely covered under section 111(m) of the Customs Act, 1962. However, the goods imported under Bill of Entry mentioned in Annexure A to the Show Cause Notice are already confiscated and redemption fine in lieu of confiscation imposed under Section 125 ibid vide OIO No. 09/Commr/2014 dated 23.05.2014. Hence, I cannot ordered for second time confiscation of said goods....
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....s Act,1962 at the relevant time provided that the appointment of ports for loading and unloading can be done by the Board (by Central Government earlier). A scrutiny of the notifications issued under the aforesaid empowering Section indicates that ports were designated on the land mass for loading and unloading and not in territorial waters, therefore loading and unloading charges have to be construed accordingly at the port which is constituted at the land mass of particular State or Union territory.The contention of the parties that their notional charges of loading and unloading included the ones that were occurred at the anchorage of mother vessel or of shifting through floating crane does not appear to be correct. In Coromondal Fertilizers case(cited supra), the apex court was concerned with landing charges from ship to port and not from one vessel to another through third vessel (or floating crane as in this case ) and held that unloading charges could not be added if the charges were already taken on notional basis.( para 3 to 9 of the decision refers). Our view of place of landing for loading and unloading being landmass of port though contrary to the reliance placed by the....
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....t the point of time and place when the goods are landed on the landmass of India and not when the ship enters the territorial waters of India. (2) Shriram Fibres Ltd. v. UOI - 1994 (69) E.L.T. 4 (Mad.) "Place of importation" in the Section 14(1) of the Customs Act, 1962 means landmass of India and not territorial waters - "For delivery" in the same section means delivery exwharf and not delivery ex-ship. (3) Garden Silk Mill Ltd. v. UOI - 1999 (113) E.L.T. 358 (S.C.) The import of goods into India would commence when the same cross into the territorial waters but continue and is completed when the goods become part of the mass of goods within the country. These decisions were no doubt given in the context of inclusion of landing charges in the assessable value, but these are very relevant for interpreting the phrase 'place of importation' occurring in Section 14(l) of the Act as well as in Rule 9(2). We note that the Apex Court decision in Garden Silk Mills Ltd. (supra) is rendered by a 3 Judges Bench and hence is binding on all sub-ordinate Courts and Tribunals. Applying .the ratio of the said judgment the inevitable conclusion is that ....
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....the appellants that barging charges are part of the charges incurred at the place of importation within the purview of Rule 9(2)(b) is totally misplaced. In view of the Apex Court decision in Garden Silk Mills (supra) once the place of unloading is held as the place of importation, the cost of transport to such place cannot be confused with unloading charges incurred at such place. The use of the word 'to' and 'at' respectively as prefixes to the phrase 'place of importation' in Rules 9(2)(a) and 9(2)(b) clearly brings out the distinction between transport charges on the one hand and unloading and handling charges on the other. While calculating the amount for charges under Rule 9(2)(b), the 1% has to take into account the f.o.b. value, transport cost and insurance cost as the basis. Obviously, the charges under Rule 9(2)(b) do not include the transport cost itself which comes under the purview of Rule 9(2)(a)". 8. We, therefore, hold that barge charges being part of the transport cost to the place of importation are includible in the assessable value. It would have been different if the c.i.f. price paid to the supplier had included this cost and the barge charges were in....
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....ge charges are not includible in the assessable value or that the place of importation shifts to the anchorage point in the sea. The ratio of the 3-Judge Bench of the Apex Court In Garden Silk Mills (supra) clearly defines the term 'place of importation', following which we hold it to be the notified place of unloading. Consequently, we also hold that barge charges representing the cost of transport to such place to be includible in the assessable value. The place of importation cannot shift depending on when and where the customs document are filed and signed nor can the customs value be made dependent on such eventuality. Certain customs formalities relating to boat notes, transhipment etc. have been prescribed for facilitating safe landing of the goods in the notified customs area under customs control for subsequent clearance. Such procedural provisions cannot be interpreted to shift the place of importation to a point in sea against specific judicial pronouncement to the contrary. 12. In view of our findings above, we hold barging charges to be includible in assessable value. ................................. ". 18. However, we find that later in the matter of Ispa....
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....n granted after due payment, and goods were allowed to be water-borne through a Boat Note under Section 35. 59. The goods were unloaded from the mother ship on to the barge at BFL which, do doubt, had not been approved as the landing place under Section 8 of the Act. However, Section 33 permits unloading at a place other than that approved under Section 8 with the permission of the proper officer, and there is no doubt that permission had been obtained under Section 33 under the supervision of the proper officer under Section 34, and the goods were accompanied by a Boat Note under Section 35 of the Customs Act. Hence, unloading of the goods from the mother ship at the BFL was valid, since it was done in accordance with Sections 33 and 34 of the Customs Act. No doubt, the BFL had not been approved as proper place under Section 8(a), but it was a place where the mother ship could anchor. Hence, in our opinion, there is no illegality. 60. In the impugned order dated 7-3-2001 the Tribunal has based its decision on its conclusion that the place of import was the Dharamtar Jetty and not the BFL (vide paragraphs 9 to 18 of The Tribunal's order). Without commenting on the....
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....ed by the above decision, we find that shifting charges in the anchorage cannot be strictly considered as unloading/ loading charges at the port in view of statutory provisions and case law discussed The question as to whether any further addition to CIF value for transportation charges is warranted or not, needs elaborate discussions and findings on various aspects and some of these, inter alia, are as follows: - a) Whether the goods at any stage prior to their landing at the final port destination were cleared for home consumption or not? b) Whether a permission by the proper officer had been given under Section 33 and 34 for moving the Cargo to the barge and whether the goods were accompanied by a boat note under Section 35 of the Customs Act, 1962? c) Whether the mother vessel by which goods arrived could or could not anchor at the main port? d) Whether the Jetty at which goods were eventually discharged was included or not included in the bill of lading as port of discharge. e) Whether who paid the consideration (even if buyer) is relevant consideration or not or any emergent situation relating to draft of the ship as mentioned in p....
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....er, 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;" Prior to 2007 the Rule 9(2) of the Customs Valuation (Determination of Value of Imported Goods), Rules 1988 read as follows: "(2) For the purpose of sub-section (1) and subsection (1A) 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 ofthe 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; (ii....
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....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 specified in the rules made in this behalf: 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 commissions 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,- After 2007, the Rule 10(2) of Custom Valuation (Determination of Value of Imported Goods) Rules, 2007 read as under: "10(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, and shall include - (a) the cost of transport, loading, unloading and handling charges associated with the delivery of the imported goods to the place of importa....
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....a perusal of the same shows that the value to be determined is a deemed value and not necessarily the actual value of the goods. Thus, Section 14(1) creates a legal fiction. Section 14(1) states that the value of the imported goods shall be the deemed price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade. The word "ordinarily" in Section 14(1) is of great importance. In Section 14(1) we are not to see the actual value of the goods, but the value at which such goods or like goods are ordinarily sold or offered for sale for delivery at the time of import. Similarly, the words "in the course of international trade" are also of great importance. We have to see the value of the goods not for each specific transaction, but the ordinary value which it would have in the course of international trade at the time of its import. 15. The view we are taking in this case is in accordance with the three-Judge Bench decision of this Court in M/s. Rajkumar Knitting Mills (P) Ltd. vs. Collector of Customs, Bombay AIR 1998 SC, 2602. In para 7 of the said decision, it was observed thus:....
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.... with Section 14 of the Act, then of course the submission of the learned counsel for the Revenue could be sustained. However, in our opinion, Rule 9(2) has to be read along with Section 14 and it cannot be read independently. As already stated above, Section 14 creates a legal fiction and we have to see the ordinary value of the imported goods in the course of international trade at the place and time of import. This means that specific cases of import should be ignored. In fact, it is for this reason that Rules 4, 5 and 6 of the Rules have been promulgated. The actual price paid for the goods can only be taken into consideration provided the sale is in the ordinary course of trade under fully competitive conditions and the other provisions of Rule 4 are satisfied. 25. It is well-known that there are sales in which there is under invoicing or over-invoicing or for some other reasons the sale is not under full competitive conditions. In such a case, Rules 5 & 6 have to be resorted to and the actual price has not to be seen. Thus, the Rules have been created to serve the object of Section 14 which was to determine a deeming price and not the actual price of the imported goo....
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.... hence any extra transportation charge to meet this situation cannot, in our opinion, be added to the value of the goods. 62. The bills of lading show that the port of discharge was Mumbai Port/JNPT/Dharamtar. In the bill of entry, the FOB price, freight and insurance were shown separately in U.S. dollars. Since Dharamtar was also shown as the port of discharge, the freight charges paid by the buyer to the shippers included the charges for freight not only upto BFL but also to Dharamtar. (Emphasis Supplied) 26. Now I examine the observations of Hon'ble of Hon'ble Apex Court in the context of new amended Section 14 and the (Determination of Value of Imported Goods) Rules, 2007. In the year 2007, the section 14 of the Customs Act was amended. The amendment brought a significant change in the principles of valuation adopted for the purpose of charging customs duty. The concept of deemed value was discarded and instead of the deemed value, the concept of actual transaction value was incorporated in the Customs Act. A Major change in Section 14 was inclusion of the first proviso to Section 14 to specifically include in the value the cost of transportation of goods. ....
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....sions (quoted above), it is evident that the most important provision for the purpose of valuation of the goods for the purpose of assessment is Section 14 of the Customs Act, 1962. Section 14(1), has already been quoted above, and a perusal of the same shows that the value to be determined is a deemed value and not necessarily the actual valueof the goods. Thus, Section 14(1) creates a legal fiction. Section 14(1) states that the value of the imported goods shall be the deemed price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade. The word "ordinarily" in Section 14(1) is of great importance. In Section 14(1) we are not to see the actual value of the goods, but the value at which such goods or like goods are ordinarily sold or offered for sale for delivery at the time of import. Similarly, the words "in the course of international trade" are also of great importance. We have to see the value of the goods not for each specific transaction, but the ordinary value which it would have in the course of international trade at the time of its import. 16. The above decision....
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....r or seller are not related persons. Hon'ble Apex Court has clearly pointed out that the price to be arrived at under Section 14 is a deemed price and not actual price. Thereafter, the Hon'ble Apex Court has held that there is no dispute that the freight up to Dharamtar Jetty has been paid by the buyer and therefore, the Hon'ble Court has come to the conclusion that the price at which such goods are sold for delivery up the Dharamtar Jetty is available in the shape of the price agreed by the importer which includes freight upto Dharmtar Jetty. In these circumstances, Hon'ble Court has held that since the CIF value for delivery at the Dharmtar Jetty is available, it can be adopted as the deemed value of such goods for the purpose of levy of Customs duty under Section 14 of the Customs Act. For making this assertion, Hon'ble Apex Court has relied on the bill of lading which shows the port of discharge as Mumbai Port/ JNPT/ Dharamtar. 30. Thus, in view of the fact that the deemed value of erstwhile section 14 was replaced with actual transaction value of goods and specific inclusion of cost of transportation was made in the Assessable value by virtue of first proviso to Section 14(....
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....r; (ii) Loading/unloading expenses from mother ship to barge are part of cost of transportation and includible in assessable value post 2007 under new Section 14 based on actual transaction value and therefore appeals are to be dismissed. (Pronounced in the open Court on 05.06.2023) SOMESH ARORA MEMBER (JUDICIAL) RAJU MEMBER (TECHNICAL) Interim Order No. 3-4/2025 R. MURALIDHAR Vide the Interim Order No. 9-10 /2023 dated 05.06.2023, the Difference of Opinion was referred to third member on the following points:- "(i) Can the ratio of the decision of Hon'ble Apex Court in the matter Ispat Industries Ltd as reported in 2006 (202) ELT 561 (SC), with respect to transportation charges in the context of deemed value prescribed under Section 14 as it existed prior to 2007, be applied to imports made after introduction of new Section 14 in the year, 2007, subject to the riders indicated on determination of points indicated by Member(Judicial) in his remand orders. ог; (ii) Loading/unloading expenses from mother ship to barge are part of cost of transportation and includible in assess....
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....;ble Apex Court. Order is therefore set aside and Appeal is allowed by way of remand." Hon'ble Member (Technical) "30. Thus, in view of the fact that the deemed value of erstwhile section 14 was replaced with actual transaction value of goods and specific inclusion of cost of transportation was made in the Assessable value by virtue of first proviso to Section 14(1), the ratio of the decision of the Hon'ble Apex Court cannot be applied to present case. It is noticed that Hon'ble Apex Court in the case of Ispat Industries (supra) has clearly observed that transportation by barge which occurs prior to movement of barge is also part of transportation of goods(para 23 of the order by Hon'ble Apex Court in case of Ispat Industries). In this background, it cannot be said that the activity of loading the barge is not part of transportation. The appellants too have included barge charges for movement of goods of after unloading from mother ship in assessable valuation cost of transportation. 31. Moreover, in para 26 of the order of Hon'ble Apex Court in case of Ispat Industries (supra), has stated that if there are two possible Interpretations of the ru....
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.... provisions and case law of Ispat Industries and has recommended that factual details are required to be verified before coming to a conclusion as to whether the Floating Crane Charges would amount of transportation cost so as to add the same to the Assessable Value. Further, the appellant had also contested the fact that the goods were cleared on provisional basis and in terms of Section 18 (2) of the Customs Act, 1962, the provisional assessment was required to be finalized. The differential duty, if any, was recoverable under that provision. Therefore, the appellant had also contested the issue on the ground that the present proceedings could not have been initiated without finalization of the provisional assessment by directly relying on Section 28 of the Customs Act, 1962 to make the demand. The Hon'ble Member (Judicial) has also considered the same and brought into his para 19 (f) of his order. 4.1 In view of this submissions, he prays that the appeal may not be dismissed as held by Hon'ble Member (Technical), but remanded to the Adjudicating authority as held by the Hon'ble Member (Judicial). 5. Learned AR relies on the detailed findings of the Hon'ble Member (Technica....
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.... (iii) where the cost referred to in Clause (c) is not ascertainable, such cost shall be 1.125% of f.o.b. 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 the f.o.b. value of the goods :Provided also that where the f.o.b. value of the goods is not ascertainable, the cost referred to in Clause (a) shall be twenty per cent. of the f.o.b. value of the goods plus cost of insurance for Clause N above and the cost referred to in Clause (c) shall be 1.125% of the f.o.b. value of the goods plus cost of transport for Clause (iii) above] [Substituted by G.S.R. (i) 9 (E), dated 5th July 1990 [Vide Notification No. 39/90-Custom (N.T.), dated 5th July 1990 (w.e.f. 5th July 1990) for the provisions an amended by G.S.R. 851 (E), dated 10th August, 1988 [vide Notification No. 58/88-Custom (N.T.), dated 10th August, 19988] and Notification No. 71/89 (N.T.)-Custom, dated 19th December, 1989.]" 7.3 As per appellant, the unloading charges already get included in the 1% under Section 9(2)(b) above. Therefore, as per appellant in such a case, these ch....