2003 (9) TMI 692 - AT - Customs

Determination of assessable value - Imports petroleum products under all CNF as well as FOB basis and use vessels chartered - Nature of pre-importation charges required to be included in the freight amount paid by the steamer/line agents? - HELD THAT - Transaction value under the Customs Act, 1962 has to be reckoned with and would include cost, insurance and freight and would include landing charges. There is no dispute on that aspect. The dispute is whether the payments made in respect of Berth Charges, Pilotage Charges and Port Dues would be Landing charges or otherwise could be added to freight. The attempt of Revenue to add certain actual amounts of charges found to be Landing charges, as per interpretation by the Commissioner, in this case, cannot be upheld especially when 1% landing charges stand are already included, in the value, as found by the Commissioner and as per the Apex Court s decision in the case of Coromandal Fertilizers Ltd. 1999 (12) TMI 59 - SUPREME COURT . (i) The assessments were provisional and on finalisation of provisional assessments no penalties would be called for. (ii) The penalties are not called for also as the additions to value as arrived at and consequent duty demands are not being upheld. Thus, the appeal is to be allowed after setting aside the order. Ordered accordingly.

Summary

Issues involved:
The issues involved in this case include the determination of assessable value for customs purposes, inclusion of charges such as Berth hire charges, Pilotage charges, Port dues, and Wharfage in the assessable value, recovery of duty under Section 28(1) of the Customs Act, 1962, interest and penalty imposition under Section 114A, and the interpretation of provisions of the Customs Act and Customs Valuation Rules.

Summary of Judgment:

Issue 1: Provisional Assessment and Inclusion of Charges in Assessable Value
The appellants, a Public Sector Undertaking, imported petroleum products and were assessed provisionally under Section 18 of the Customs Act, 1962. The investigating officers alleged that certain charges paid to Cochin Port Trust were not included in the assessable value. Show cause notices were issued for the inclusion of charges like Berth hire charges, Pilotage charges, Port dues, and Wharfage in the assessable value. The duty short paid was sought to be recovered under Section 28(1) along with interest and penalty. The Commissioner of Customs determined that certain charges were required to be included in the valuation, while others like Wharfage were dropped from the additions.

Issue 2: Interpretation of Customs Act and Valuation Rules
The Commissioner found that charges like Berth hire charges, Pilotage charges, and Port dues were required to be added to the valuation as they were related to the transportation and handling of goods. The Commissioner's decision was based on the interpretation of Section 14 of the Customs Act, 1962, and Rule 2(2)(a) of the Customs Valuation Rules, 1988. The Commissioner held that these charges were not included in the freight and landing charges and needed to be added to the assessable value for levy of Custom Duty.

Issue 3: Landing Charges and Apex Court's Decision
The transaction value under the Customs Act includes cost, insurance, freight, and landing charges. The Apex Court defined landing charges as the expenditure incurred by an importer to bring goods on board ship to land. The charges paid to bring goods on board a vessel to land were considered landing charges. The Commissioner's distinction between "goods related" and "vessel related" charges was deemed irrelevant. The charges incurred were held to be part of landing charges and required to be included in the value for the levy of Custom Duty.

Conclusion:
The Tribunal found that the charges in question were to be considered as landing charges and needed to be included in the assessable value. The provisional assessments were finalized, and penalties were not warranted due to the findings on the additions to value. The appeal was allowed, and the order was set aside based on the Tribunal's conclusions.

This summary provides a detailed overview of the judgment, including the issues involved, the interpretations of relevant legal provisions, and the final decision of the Tribunal.