TaxTMI 
TaxTMI 
2004 (5) TMI 186
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....ing the imported cargo of Vikram Jetty at Revdanda Port. At the jetty, there is no stock yard for storage. There is however an arrangement of Continuous Barge Unloader (hereinafter referred to as 'CBU'), Figee Crane, H.B.L. Loader System and Conveyor Belt System installed with the help of CBU, and other instruments the cargo in the barges is loaded on to the convey belt system which moves the cargo from the jetty to the factory of the appellant to storage areas situated about 2 to 33 KMs away from the jetty. When the cargo is unloaded from the "mother vessel" on to the barges, the pay loaders/uniloaders belonging to the appellants are used in the hatches of the 'foreign mother vessel' to bring the cargo from the corners of the hatch to the centre of the hatch, under its mouth, to facilitate the Floating crane to lift the cargo from the hatches and discharge the same into the Barges. The cleaning of hatches is also done by these Payloaders/Uniloaders. The Barges/Floating Crane are required to be moored/unmoored, manually by the seamen, to and from the 'foreign mother vessel' at the anchorage for effective discharge of cargo, from the foreign 'mother vesse....
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....by them on the use of barges for bringing the imported raw materials from the point of anchorage to the Vikram Jetty and they did not produce necessary documents to facilitate the working of actual expenses in respect of lapse of long period and repeated reminders, the barge expenses were taken at the rate of Rs. 96.38 per metric tonne, as the expenses incurred by another importer, M/s. Ispat Industries Ltd., Dharamtar inasmuch as it was felt that the circumstances of the barge lighterages of the present importer and that in the case of M/s. Ispat Industries Ltd. was similar. As the importer had failed to make available total expenses incurred on the Floating crane as well as failed to produce relevant documents to facilitate the working of actual expenses incurred on the use of Floating crane for transhipment of imported cargo to the barges, in spite of several letters/reminders, the expenses on Floating crane on the basis of notional hire cost/repair and maintenance expenses/overheads/bunker cost and profit margine taken to reckon the demand made. 3. The lower authority after considering the reply and hearing the importers found : (a) since the mother vessel is anchor....
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....t was found that in the present case there were exceptional circumstances and therefore there existed compelling reasons to attribute the meaning to the expression 'India' as comprising only of land mass and the word 'import into India' to mean when the imported goods are unloaded on the land mass and not otherwise. Therefore the definition clause was required to be abandoned and the word was required to be understood in common parlance. It was concluded that importation goods is an integrated process which culminates when the goods are landed on the landmass of India so that they can be introduced in the stream of supplies to form a part of the mass of goods within the country. Therefore it was concluded that the place of importation in this case for the purpose of Section 14 is nothing but the Vikram Jetty at Revdanda port a declared port. (f) He differentiated the case of Apar Pvt. Ltd. of the Bombay High Court [1991 (51) E.L.T. 224 (Bom.)] and found that the facts and circumstances in the present issue were different and relying upon the case of Shriram Fibres Ltd. v. Union of India, 1994 (69) E.L.T. 4 (Madras), Barium Chemicals Ltd. v. Union of India, ....
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.... (i) After considering the computation of delivery stevedoring charges submitted by the importer, he found that the imported had failed to give correct and total information as regards the expenses incurred by them under various heads and the Chartered Accountant's Certificate submitted as regards the expenses incurred of Floating crane and fuel cost were not included while computing operational cost and since the importer had failed to give complete and total expenses incurred and considering the floating crane capacity, he found that he had no option to adhere to the theoretical method for inclusion of expenses. (j) As regards the comparison of the activity with that of M/s. Ispat Industries Ltd., as proposed in the Show Cause Notice to determine the barge expenses, he found that since the importer had failed to provide the relevant documents and the Chartered Accountant's Certificate did not reveal the total and correct expenses, and the fact that the circumstances in the operations of 'Barge lighterage' of the importer and that of M/s. Ispat Industries Ltd. was similar, the expenses incurred on such activities are comparable, the expenses of M/s....
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....area to which access is permissible only by a "Pass" and therefore, the security officer or the guard at the gate is required to examine the "Pass" and see whether it has been issued by the appropriate authority in respect of the person holding the same and was valid for the day or time of seeking entry or exist. Such security officer does not by himself decide as to whether the holder of the "Pass" was otherwise eligible for such a "pass". Similarly, the proper officer acting under Section 47 does not adjudicate. He merely sees as to whether all the prescribed formalities have been duly completed and allows the goods to go out of Customs charge if he is satisfied in this respect...". Thus this place and point of time of order under Section 47(1) would constitute 'Crossing the Customs barrier". Once the goods clear such Customs Barrier, costs incurred thereafter, by a "pass" holder, cannot be added by any stretch of imagination to be costs to go to add to compute the value being incurred up to the crossing of 'Customs Barrier' for Custom duty computation. The lower authorities have held and proceeded to add all such costs to be added for computation as up to de....
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....ed on BE's noted bearing IGM of mother vessel as for goods to be landed at that port, the finding of 'transport/transhipment' being effected, in this case, as arrived at by the original authority, is not correct on facts and in law. (e) The finding in the impugned orders of the lower authority that disputed expenses are towards 'transhipment/transport' not only are not correct on facts and law but also travel beyond the Show Cause Notice issued, it cannot be upheld. Since Boat Notes used in this case are found to be in Form II issued under Boat Notes Regulation 4(ii), whereas Boat Notes for Transhipment of cargo are issued under different provision of Regulation 4(iii). 'Transhipment' of goods is governed by Goods Imported (Condition of Transport) Regulations 1995, issued by the Central Board of Excise & Customs under the provisions of Section 158 of the Customs Act, 1962. These regulations provide for 'Transport' of imported goods by another vessel or by a different mode of transport i.e. Road, Sea, Air as the case may be, of imported goods brought by a vessel and mentioned separately as such in the Import General Manifest as for 't....
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....atch money were in the nature of penalties or rewards by virtue of contract charters and could not be added as freight the Larger Bench in the case of Indian Oil Corporation Ltd., 2000 (122) E.L.T. 615 (Tri.-LB) laid down the items which were to be included under Valuation Rule 9 as expenses towards freight, as only those, which were incurred in ordinary circumstances and extra ordinary expenses which could not be added thereunder to enhance an assessable value. Department in the present case cannot therefore take a stand contrary to its own instructions and being bound by this Larger Bench decision, since confirmed by the Supreme Court, 2004 (165) E.L.T. 257 (S.C.), as all extraordinary costs of transport, incurred, to bring and land the goods ashore, due to the peculiar situation at a port cannot be added. After noting the provisions of the Customs Act, 1962 definition as per Section 2(23) for Import, 2(24) Import Manifest, 2(27) India, 2(28) Indian Customs Waters and the provision of Section 30 of the Customs Act, in the case of Union of India v. Mustafa Najibai Trading Co., 1998 (101) E.L.T. 529 (S.C.), after observing that Outer Anchorage, was part of Bombay Port held as follo....
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...., the goods have to be considered as 'imported' goods and the provisions of Customs Act, 1962 as per Sections 31 to 38 of that Act would apply. In the present case, the vessel has been boarded and permission by proper officer under Section 47 of the Customs Act, 1962 after examination of cargo have been granted after due payment and goods are allowed to be water borne, then the transport of the imported goods, would cease at that stage/place is at anchorage in this case. Further movement of the goods, would be amounting to 'shifting of the cargo' by barge to a jetty and from one jetty to another site on Ports land, within the Port area. Such shifting could be carting of cargo by water and or on land. It cannot be equated to transport of cargo, to the port of importation. The word 'transport' especially 'trans' in the New Shorter Oxford English Dictionary is defined to mean as a prefix in English language in the sense of 'across beyond in or other side' and the word 'transport' is defined to mean "move or carry from one place or person to another convey across." Therefore, the term 'costs of transport of the imported goods to the p....
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.... open to the Customs authorities not to assess landing charges at a percentage and to assess them at actuals. But if they do assess them on a percentage basis, they cover thereby all aspects of landing charges and it is not open to them then to seek to add any amount thereto on the basis that this or that or the other was not covered thereby. In this case, the disputed expenses have been incurred for the purpose of landing the goods from the ship on to land i.e. terra firma. Hence, being bound and by applying the law as settled by the Apex Court in Corromondal Fertilisers Ltd. case (supra), these charges in dispute herein are nothing to be understood but 'landing charges' and be covered under Rule 9(2)(b) and not Rule 9(2)(a). However, as the appellants have already added 1% towards these charges on to value and paid duty on the same, then following the very same decision of Corromondal Fertilisers Ltd., no further amounts can be ordered to be added on to the value under Section 14 of the Customs Act, 1962 and duty demands made thereafter. (h) Stevedoring charges, as in this case, have been held and accepted as loading/unloading charges by the CBEC pursuan....
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.... (iv) that decision has completely omitted to consider the decision of the Hon'ble Supreme Court in case of Corromondal Fertilisers Ltd., 2000 (115) E.L.T. 7 (S.C.) = 2000 (36) RLT 1 (SC) as to the scope of term "landing charges" defined by the Apex Court. In Ispat Industries case 2001 (135) E.L.T. 646 (T) = 2001 (45) RLT 850 (T), as it appears from para 3 of that decision which reads : ".....in terms of Rule 9 (2)(b) the charges of transportation from the mother vessel were for loading, unloading and handling for the delivery for the importation and therefore would warrant inclusion. We would take this as the charge and the ground for confirmation of the demand..." Therefore, that was a case under Rule 9(2)(b) and not of inclusion under Rule 9(2)(a) i.e. cost of transportation. However, that Bench in para 23 of that decision, applied Rule 9(2)(a) to include the charges impugned therein, which was not the issue, as found and admitted by them to be before them or was the case of department in the notice in that case. (v) Did not consider the provision of Sections 33 and 35 of the Customs Act, 1962 have not been considered. (vi) did no....
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....hown, the barge hire charges within the port area cannot be added as 'transport costs.' (k) A reading of Rule 9(2) shows that not only normal costs as per clauses (a), (b) and (c) could be included, to the extent they have not been already included, in the price agreed to be paid by the buyer to the seller, there is also a cap prescribed on all such costs addable as per the proviso under Rule 9(2). CIF price in Halsbury Law is defined as - "CIF (cost, insurance, freight) contracts (or contract) where the goods are sold at a price which includes their cost, freight and destination; and the premium on a policy c. f. insurance covering the transit; the buyer's duty is to pay the price upon delivery not on the goods, but on documents covering them, which typically include the bill of lading, policy of insurance and invoice. (41 Halsbury's Laws (4th Edn) page 612)." from the aforesaid, it is clear that where the transaction value is negotiated price between the buyer and the seller, to include freight elements up to the destination stipulated in the contracts, nothing further is required to be added, when the destination is the port of....
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....se 9 (2)(a) and plus the cost of insurance under clause 9(2)(c). Therefore, the activity for loading, unloading and handling and ascertainment cost thereof as per actuals or comparable costs as arrived at, is not required. In this connection, it is significant to record that prior to its substitution by M.F. (D.R.) Notification No. 39/90 (NT)-Cus., dated 5-7-1990, this proviso (ii) to Rule 9(2) provided for the ascertainment of such charges and if such actual ascertainment was not possible, 1% of free onboard value was to be reckoned as charges on this account. When by this substitution of a standard 1% provided and prescribed in all cases and the same said 1% is found to be included, same is not being disputed, then again adding any further costs or charges under Rule 9(2)(b) cannot be approved or resorted. All charges, costs, as incurred, are being found in this case are found to be covered by the terms used in Rule 9(2)(b), therefore they cannot be added over and above the 1% which already stands added to determine the assessable value under Section 14 of the Customs Act, 1962 read with Valuation Rules, after the substitution with effect from 5-7-1990. In this view of the findin....
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....ted in Section 14, after deleting clause (b) of sub-section 1. The new sub-section (1A) stipulates that subject to the provisions of sub-section 1, the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. Pursuant thereto Customs Valuation (Determination of Price of Imported Goods) Rules 1988 have been framed. Post 1988, therefore, the value of the imported goods has to be determined in accordance with the rules which, according to the respondents, are based on the GATT Valuation Code (also called Article VII of the General Agreement on Tariff and Trade) which was adopted in 1979. With these Rules, however, we are not concerned in the present case because all the goods were imported prior to the incorporation of sub-section (1A) of Section 14 of the Act. which clarified that the controversy settled by the Supreme Court therein was, as regards inclusion of 'landing charges' to determine value of imported goods prior to 1988. There is no conflict with the additions of 'landing charges'. There can be no dispute that after 1988 as per Rule 9 (4) of Valuation Rules, the charges p....
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....being relieved of loading representing post importation expenses' held that 'legislation intended to excluded post importation expenses need not be doubted, but it had to do this in a practicable manner without undue refinement..." Therefore, when extent of charges/costs that could be included, have since been legislated in a practical manner under Rule 9 of the Valuation Rules in 1988 as amended, nothing else could further be added to arrive at a value. (o) As regards the applicability of the case of Indian Oil Corporation Ltd., 2003 (161) E.L.T. 375 (T) = 2003 (54) RLT 926 (CEGAT-Kol.) the decision would be squarely applicable, to add the extra transport costs, if in facts and law; transhipments occurred, and costs incurred in transporting the cargo to destination port. That case was a clear case of transhipment. In that case, the deductions from the 'transport costs' already included up to the port of destination were held to be granted, if the de-escalation clauses were entered into the relevant contracts. There cannot be a de escalation clause applicable on transport, within the same port area, as in this case. If the barge/lighter is traversing from a....
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....o be included. 7. This Appeal heard together with other appeals, on similar issues, are being disposed of in view of the finding above as- (i) Appeal No. C/618/2000-Mum. of M/s. Vikram Ispat Ltd. is allowed, after setting aside the order with consequential relief as per law. (ii) Appeal No. C/593/2000-Bom. of M/s. Ispat Industries Ltd. is also allowed, since the facts therein are similar as in the case of M/s. Vikram Ispat Ltd. and the clearances have been effected after Section 47 order as per the following letter (F. No. S/19-Misc.-56/94 Docks, dated 7-9-1994) of Docks Appraising Unit, Bombay Custom House and on Boat Notes issued in proforma for landing. "Please refer to your letter dated 18-8-94. It is observed from your letter that the foreign vessel carrying Iron Ore Pellets is proposed to be anchored in the waters of B.P.T. Port at BFL and your company desires to unload the raw materials directly into the barges/lighter vessels and into the lorries parked on the wharf. Your request has been examined by this Custom House and it has been decided to allow the unloading/discharge directly into the barges. The operations can commence only aft....
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....port of lighterage or actual landing on jetty of Port at Magdalla/Hajira. Since the facts are required to be established, this appeal is allowed as remand, after setting aside the matter to redetermine the nature of the transfer of the cargo on to the barges and the point of Section 47 order in each BE and thereafter determine the inclusion or exclusion of the relevant costs as proposed in the notice. This appeal is to be allowed as remand. (v) In Appeal No. C/454/02 M/s. Essar Steel Ltd., also there are BEs which are showing Bhavnagar Port Anchorage as the Port of the lighterage the Mother Vessel and barges moved from Bhavnagar Port to Hajira Port. Since Bhavnagar Port and Hajira Port are two different Ports or Customs Stations, the nature of the movement of the cargo from Bhavnagar Port to Hajira Port on barges has to established. Only thereafter, the cost can be added or not, to determine the duty after applying the findings hereinabove and in the case of Indian Oil Corporation 2003 (153) E.L.T. 626 (CEGAT) (sic). Since facts are to be established to quantify the demands of duties, if any, the order is to be set aside and the matter remitted back for redetermination, af....