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2011 (6) TMI 518 - AT - CustomsProvisional assessment - show-cause notice dated 19.10.2006, the Deputy Commissioner concerned called upon HPCL to show cause why the provisional assessment should not be finalized on the basis of transaction value inclusive of lighterage/barging charges and demurrage charges - The main ground raised by the appellant is that excess payment of ₹ 9.85 crores as duty on the excess quantity of crude oil based on shore tank measurement vis-a-vis invoice value was not taken into account by the lower authorities while quantifying the demand of differential duty - clubbing of excess payment of duty claimed as refund on the one hand and demand of differential duty by the department on the other, by adopting the method of adjustment, would certainly result in nullifying the provisions of Rule 7(4) of the Central Excise Rules, 2002 - Decided against the assessee. Adjustment of short and excess payment - held that - claim for adjustment between the differential amount of duty demanded by the lower authorities in relation to the first set of 42 Bills of Entry and the excess amount of duty relating to the second set of 43 Bills of Entry is not tenable and the same is rejected. As regards the demurrage charges - Tribunal s Larger Bench in the case of Indian Oil Corporation vs Commissioner of Cus., Calcutta 2000 (11) TMI 164 - CEGAT, COURT NO. I, NEW DELHI , wherein it was held that demurrage was an extraordinary expenditure which did not require to be added to the transaction value inasmuch as Rule 9 of the Customs Valuation Rules did not contemplate inclusion of extraordinary expenses like demurrage in the assessable value of the goods - Held that Assessable value shall not include demurrage charges
Issues Involved:
1. Adjustment of excess payment of duty against short payment. 2. Basis of assessment: invoice value vs. shore tank quantity. 3. Inclusion of demurrage charges in the assessable value. 4. Minor grievances regarding specific Bills of Entry and duty calculations. Issue-wise Detailed Analysis: 1. Adjustment of Excess Payment of Duty Against Short Payment: The appellant argued that the excess payment of Rs. 9.85 crores should be adjusted against the differential duty demand of Rs. 43.27 crores. They relied on the Tribunal's decision in M/s. Apar Industries Ltd., which allowed such adjustments when all Bills of Entry were finalized by a common order. However, the respondent contended that such adjustments were not permissible under the law, emphasizing the need for independent assessment of each Bill of Entry and the requirement to file a refund claim under Sec.27 of the Customs Act. The Tribunal upheld the respondent's view, citing the Larger Bench decision in Excel Rubber Ltd., which disallowed clubbing of different clearances for finalization of provisional assessments and required separate refund claims for excess payments. Consequently, the Tribunal rejected the appellant's claim for adjustment. 2. Basis of Assessment: Invoice Value vs. Shore Tank Quantity: The appellant contended that the assessment should be based on the shore tank quantity rather than the invoice value, citing CBEC Circulars and past practices. However, the Tribunal noted that this issue was not raised in the Memo of Appeal and therefore could not be considered. The Tribunal emphasized that the finalization of provisional assessment should be based on the invoice value. 3. Inclusion of Demurrage Charges in the Assessable Value: The appellant argued that demurrage charges should not be included in the assessable value, relying on the Tribunal's Larger Bench decision in Indian Oil Corporation Ltd., which was affirmed by the Supreme Court. The respondent cited contrary decisions and a Board Circular instructing the inclusion of demurrage charges. The Tribunal sided with the appellant, holding that demurrage charges are extraordinary expenses and should not be included in the assessable value, in line with the Indian Oil Corporation Ltd. decision. 4. Minor Grievances Regarding Specific Bills of Entry and Duty Calculations: The appellant raised specific grievances regarding certain Bills of Entry, including incorrect inclusion of a Bill of Entry not pertaining to them, consideration of crude sent to other ports, and clearance under DEEC. The Tribunal acknowledged these grievances and directed the original authority to re-examine and decide upon these issues in accordance with law and principles of natural justice. Conclusion: The Tribunal ordered the following: (a) Finalization of provisional assessment on the basis of invoice value. (b) Exclusion of demurrage charges from the assessable value. (c) Disallowance of adjustment between differential duty and excess payment of duty. (d) Re-examination of issues arising from specific Bills of Entry by the original authority. The impugned order was sustained with the aforementioned modifications, and the appeal was disposed of accordingly.
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