2011 (3) TMI 1298 - AT - Customs

Provisional assessment - whether addition of cost for beaching and whether tug charges are includible in the assessment over and above the contract value - beaching of the vessel was the responsibility of the seller and all amounts to be paid on that account were to be borne by the seller - Held that - The contract price is for delivery at the time and place of importation and inclusive of all costs charges and expenses to be incurred or actually incurred by the seller for effecting the delivery at the place of importation and nothing further can be added as is clear from the provisions of Section 14 of Customs Act 1962 - Appeal is allowed

Summary

Issues:
1. Interpretation of Customs Valuation Rules regarding the division of costs for beaching and inclusion of tug charges in the assessment value.

Analysis:
The case involved an appeal by a company engaged in ship breaking against an Order-in-Appeal of the Commissioner of Customs. The main issue revolved around the reference to the division of cost for beaching and whether tug charges should be included for assessment beyond the contract price. The Commissioner (Appeals) ordered re-assessment of the Bill of Entry by considering the actual cost after verification.

The appellants argued that the CIF value declared in the Bill of Entry represented the transaction value under Rule 3 and was supported by a clear agreement with the seller. They contended that the expenses for local tugs and beaching were the seller's responsibility, as per the agreement terms. The appellants emphasized that the expenses incurred post-importation could not be considered transportation charges and should not be added to the assessable value.

Upon examining the MOA and relevant clauses, the Tribunal noted that the responsibility for beaching the vessel lay with the seller, and all related costs were to be borne by the seller. The contract price was inclusive of all costs for delivery at the place of importation, as per the Customs Act, 1962. Referring to a previous judgment, the Tribunal highlighted that charges incurred after the import order could not be added to the value under Section 14.

Considering the arguments presented by both parties, the Tribunal concluded that the appeal should be allowed. The impugned order was set aside, and the appeal was granted in favor of the appellants.

In summary, the judgment delved into the interpretation of Customs Valuation Rules concerning the allocation of costs for beaching and the inclusion of tug charges in the assessment value. The decision emphasized the contractual obligations, the responsibility for expenses, and the principles governing the determination of assessable value post-importation.