2007 (6) TMI 48 - AT - Customs

Valuation (Customs) -Alleged that freight incurred in the daughter vessels had not been included by appellant in the assessable value and accordingly demand were made along with interest and penalty - After considering the fact held that demand and penalty not imposable and matter remanded for reconsideration

Summary

Issues:
1. Inclusion of 'daughter vessel freight' in the assessable value of goods.
2. Imposition of penalty under Section 114A of the Customs Act.
3. Finalization of provisional assessments.
4. Intent to evade payment of duty.

Analysis:

Issue 1: Inclusion of 'daughter vessel freight' in the assessable value of goods
The appellants contested the quantum of 'daughter vessel freight' adopted by the Commissioner for inclusion in the assessable value. The appellants argued that assessments were provisional, citing a Board's Circular that clarified the methodology for determining the freight. The Tribunal noted that the assessments were provisional and required finalization as per the Board's circular. The case was remanded to the Commissioner for a speaking order after considering the appellants' worksheet.

Issue 2: Imposition of penalty under Section 114A of the Customs Act
The appellants argued that there was no intent to evade duty as they had paid duty on a notional basis during investigations. The Tribunal considered that the legal position regarding the inclusion of 'daughter vessel freight' was not clear, as evidenced by the Board's Circular issued after deliberations. It was deemed inappropriate to impose penalty under Section 114A in such circumstances. The Commissioner was directed to consider this aspect while acting upon the remand order.

Issue 3: Finalization of provisional assessments
The Tribunal found that the assessments were treated as final by the Commissioner, contrary to the Board's Circular indicating provisional nature. It was held that the assessments needed to be finalized as per the Circular, and the case was remanded to the Commissioner for passing a speaking order after finalizing the provisional assessments.

Issue 4: Intent to evade payment of duty
The Tribunal considered the appellants' argument that there was no intent to evade duty, especially since they had paid duty on a notional basis. The legal position regarding the inclusion of 'daughter vessel freight' was not clear at the time, as indicated by the Board's Circular. Therefore, it was concluded that imposing penalty under Section 114A was not justified in this context.

In conclusion, the Tribunal remanded the case to the Commissioner for finalization of provisional assessments and directed a reevaluation of the penalty imposition considering the lack of clarity in the legal position at the time. The appeal was disposed of accordingly.