TaxTMI 
TaxTMI 
2023 (11) TMI 1435
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....otch/spirit concentrate which is used in manufacture of bottled-in-India alcoholic beverages ('BII') and Indian Manufactured Foreign Liquor (IMFL), and (ii) Import of bottled- in-origin finished products ('BIO'). The present Application relates to proposed modifications to import pattern of bulk scotch / spirit concentrate ('bulk concentrate') having HSN code 2208 3093, referred at (i) above. 2. The Company currently imports bulk concentrate for whisky, etc. from its related supplier namely Diageo Brands B.V., Netherlands. Upon unloading of the goods at port / airport in India, the containers of bulk concentrate are transferred to designated Container Freight Station (CFS) for inspection. The Company files Bill of Entry for Warehousing and goods are warehoused at a customs bonded warehouse located near the port. Subsequently, as and when required, the goods are cleared for home consumption from the bonded warehouse upon payment of Customs duty and transferred to manufacturing units. 2.1 The bulk concentrate is used as a raw material for manufacturing of alcoholic beverages at manufacturing units across India. 2.2 Currently, the Company p....
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....other related activities are carried on. The FTWZs inter-alia provide a host of facilities and world-class infrastructure such as temperature controlled area, state of art container and cargo yards, warehousing infrastructure, etc. These facilities will help the Applicant to increase operational efficiencies and ensure proper storage of raw material before its use. 2.3.4 The Applicant will follow the below mentioned procedure under the applicable legal provisions for proposed import pattern: Movement Procedure 1. Trans-shipment from customs seaport/airport to FTWZ * Trans-shipment of goods from port to SEZ (FTWZ) will be declared in arrival manifest in Form- VIII - [Regulation 7 of the Sea Cargo Manifest and Tran- shipment Regulations, 2018]; * Upon unloading of the bulk at Customs port / airport, the goods will be trans-shipped to FTWZ unit by filing Bill of Entry in accordance with Section 26 r/w Rule 29 of the Special Economic Zones Rules, 2006 ("the SEZ Rules'). No duty is payable on entry into FTWZ in terms of Section 26 of the SEZ Act. 2. Clearance to DTA upon payment of Customs duty * As and when required, the goods will be clea....
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....itions 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" b. Rule 10(2) of the CVR, 2007 states that the value of imported goods will include the transportation, insurance, loading, unloading and handling charges, associated with the delivery of imported goods to the place of importation. Relevant extract of Rule 10(2) is as follows: "(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 importation; (b) the cost of insurance to t....
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....e in accordance with Customs Act and rules made there under"; e. Section 51 of the SEZ Act which starts with a non-obstinate clause stipulates that in case of conflict with any other law, the provisions of the SEZ Act shall prevail. III. In summary, the goods when brought into FTWZ will be exempt from duties of Customs under Section 26 of the SEZ Act. When the goods are cleared into DTA, the same will be chargeable to duties of customs as leviable on such goods when imported under Section 30 of the SEZ Act. The valuation of such goods is to be determined as per provisions of the Customs Act and Rules thereunder. In light of above provisions, the includability of various charges in the assessable value for payment of Customs duty(ies) during clearance of goods from FTWZ (SEZ ) to DTA will have to be determined as provisions of the Customs Act read with the CVR, 2017 thereunder. The same is examined hereunder: Includability of charges mentioned at Question (i): A. Given the provision of Section 14 of Customs Act r/w Rule 10 of CVR, 2007, the Applicant believes that the charges specified under Rule 10(2) of the Customs Valuation Rules, 2007 incurred at th....
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....e current import pattern, various charges referred to at Question (ii) above are not included in the assessable value. 3.2 Furthermore, sixth proviso to Rule 10(2) of CVR, 2007 states that in case of goods imported by sea or air at any customs station and transhipped to another customs station in India, the transportation and other handling charges associated with such transhipment shall be excluded from the assessable value of imported goods. Relevant extracts of the sixth proviso to Rule 10(2) are as follows: "Provided also that in the case of goods imported by sea or air and transhipped to another customs station in India, the cost of insurance, transport, loading, unloading, handling charges associated with such transhipment shall be excluded" 3.3 Reference is made to the Circular No. 39/2017, wherein in respect to transhipment cost it is categorically clarified that costs related to transhipment of goods within India will be excluded from the assessable value. Relevant extract of Circular No. 39/2017 is as follows: "Now, by virtue of the 6th proviso to Rule 10(2), costs related to transhipment of goods (from ports to ICDs; port to port, port to CFS, Air....
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....vernment (in the past decade) to notify various SEZ as customs port / land customs stations. 3.6.1 In view of the above, it is manifested that the in the present case, the goods are unloaded at a Customs station and trans-shipped to another Customs station in India. 3.6.2 Given the foregoing, the loading, unloading and handling charges incurred at the seaport/airport in India where goods are unloaded and the costs of transportation from port to FTWZ are outside the purview of Rule 10(2) of the CVR, 2007. Circular No. 39/2017 has clarified that the said charges incurred in India are excludible from assessable value. Furthermore, these charges are specifically excluded by virtue of 6th proviso the Rule 10(2). 3.6.3 Accordingly, the charges specified at Question (ii) are excludible from the assessable value of imported goods for payment of customs duty. Includability of charges mentioned at (iii) above (i) FTWZ is a statutorily notified customs port in India. The Applicant will incur warehousing rent, unloading, loading charges, etc. while the goods are at FTWZ. (ii) As per the scheme of Rule 10(2) of the CVR, 2007 and as clarified by Circular No. 3....
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....udible in the assessable value. 3.6.5 Therefore, in summary, the various charges listed at Annexure II [except those listed in Query (i)] are not includible in the assessable value of the imported goods. All the grounds submitted are without prejudice to each other, and the Applicant also craves leave to add, to alter, amend and/or modify all or any of the foregoing submissions before any ruling is pronounced by the Authority on the above questions. 4. A personal hearing was held on 11.10.2023. The advocate representing the applicant started by giving introduction of the applicant company, in brief. He mentioned that presently they are involved in import of goods which are normally warehoused on import and thereafter cleared for home consumption from the warehouse, however, the applicant now proposes to change their import pattern as after import of goods, they intend to take such goods to FTWZ and accordingly, they wish to have certainty on the matter related to valuation of imported goods viz various charges which are required to be included for the purposes of assessment of such goods. He further stated that comments of the concerned Commissionerate are in conformity wi....
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.... (iv) As per Circular No. 39/2017-Customs dated 26.09.2017, Place of Importation has been defined as follows: "Place of Importation" means the customs station where the goods are brought for being cleared for home consumption or for being removed for deposit in a warehouse. (v) As per 4.1 of this Circular, the loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation, shall no longer be added to the CIF value of goods. (vi) Para 4.2 of this circular is as follows: The phrase "loading, unloading and handling charges" appearing in the amended Rule 10 (2) (a) is to be understood in context of the Article 8(2) of the WTO Agreement which read as "the cost of transport of the imported goods to the port or place of importation". Thus, only charges incurred for delivery of goods "to" the place of importation (such as the loading and handling charges incurred at the loading port) shall now be includible in the transaction value. B. With respect to Question No. (ii), kind attention is invited to Proviso 6 to Rule 10(2) of Customs Valuation (determination of Value of Imported Goods) Rules 2007....
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.... per Rule 28, a unit or developer may import goods directly into SEZ through any port & airport etc. ii. As per Rule 37, the goods admitted into SEZ shall be utilized, exported or disposed off in accordance with act and rules within the validity period of Letter of Approval issued to the Unit. iii. As per Rule 47, a unit may sell goods and services in the DTA on payment of Customs duties under Section 30 of SEZ Act 2005. The nature of activity declared in the application is a proposed activity which is required to be carried in compliance with provisions of SEZ Act 2005 and Rules 2006. 6. After going through the elaborate reply of the field Commissionerate on the applicability of valuation principles, the following points are reiterated: On the questions on which the advance ruling is required, whether the following expenses are includible in assessable value as per provisions of the Customs Act and Rules thereunder, for payment of duty during clearance to DTA from FTWZ: (i) Loading, unloading and handling charges incurred at load port located outside India and transportation charges for bring goods upto the discharge port in India. ....
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....of this Circular, the loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation, shall no longer be added to the CIF value of goods. (vi) Para 4.2 of this circular is as follows: The phrase "loading, unloading and handling charges" appearing in the amended Rule 10 (2) (a) is to be understood in context of the Article 8(2) of the WTO Agreement which read as "the cost of transport of the imported goods to the port or place of importation". Thus, only charges incurred for delivery of goods "to" the place of importation (such as the loading and handling charges incurred at the loading port) shall now be includible in the transaction value. B. With respect to Question No. (ii), kind attention is invited to Proviso 6 to Rule 10(2) of Customs Valuation (determination of Value of Imported Goods) Rules 2007: (i) Proviso 6 to Rule 10(2) of CVR 2007 is produced as follows: 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 delivery of the imported goods to the Place of im....