2014 (4) TMI 339 - AT - Customs

Levy of Customs duty - Valuation Importation of LNG - Contract price Held that - As per the contracts between the buyer and seller transaction value has to be calculated on the basis of the quantity of LNG discharged and Brent rate - There is no evidence on record that any amount over and above the transaction value has been repatriated by asseessee to the seller of the LNG abroad - Relied upon Mangalore Refinery & Petrochem Ltd. Vs Commissioner of Customs, Mangalore 2006 (2) TMI 518 - CESTAT, BANGALORE Whether there would be any requirement for determination of the quantity of the goods as the basis for levy of customs duty would be the transaction value, i.e. invoice price and not the quantity Circular No. 96/2002-Customs, dated 27-12-2002 - Amendment in circular Levy of duty at specific rate - Held that - Board s Circular No. 96/2002-Customs, dated 27-12-2002 was amended to the extent where customs duty is leviable at specific rate - Wherever the customs duty is leviable at specific rate the assessment of bulk liquid cargo should be based on the determination of quantity for levy of customs duty - The European Countries are also following the valuation system based on GATT - Assessable value in the present imports was correctly determined on the basis of quantity of LNG discharged in India at the contracted price arrived at on the basis of an agreement - Accordingly, appeal filed by the Revenue is rejected Decided against Revenue.

Summary

Issues Involved:
1. Basis for final assessment of LNG quantity.
2. Determination of unit price for duty calculation.
3. Applicability of transaction value and relevant contracts.
4. Relevant case laws and circulars supporting the assessment basis.

Detailed Analysis:

1. Basis for Final Assessment of LNG Quantity:
The primary issue revolves around whether the final assessment of LNG quantity should be based on the quantity declared in the Bills of Lading and Load Port Ullage report or the quantity discharged at the Indian port. The Revenue argued that the quantity declared in the Bills of Lading should be taken for duty purposes as there was no flow meter available at the port of import, and the quantity cannot be based on the post-discharge survey report. The Respondent, however, contended that the quantity and value received and paid should be determined as per the contracts, which specify the quantity unloaded at the buyer's facilities.

2. Determination of Unit Price for Duty Calculation:
The Revenue contended that the unit price should be based on the provisional unit price declared in the Bills of Entry. They argued that the unit price remained unchanged in some cases while it was reduced in others, which was incorrect. The Respondent argued that the duty was correctly paid on the quantity and price shown in the final invoices, which is the transaction value as per the contracts.

3. Applicability of Transaction Value and Relevant Contracts:
Clauses 7 and 16 of the Master (Ex-Ship) LNG Sale and Purchase Agreement and Clause 12 of the Confirmation Notice between the contracting parties were crucial. These clauses stipulated that the transaction value should be calculated based on the quantity of LNG discharged and the Brent rate. The judgment emphasized that there was no evidence of any amount over and above the transaction value being repatriated by the Respondent to the seller abroad.

4. Relevant Case Laws and Circulars Supporting the Assessment Basis:
The Respondent relied on several case laws and CBEC circulars to support their argument that the quantity delivered should be the basis for assessment. Notable references included:
- Mangalore Refinery & Petrochem. Ltd. Vs CC Mangalore [2006 (205) ELT 753 (Tri.-Bang.)], which emphasized that the transaction value should be based on the quantity received in the shore tanks.
- Circular No. 6/2006-Cus. dt. 12.1.2006 and Circular No. 96/2002-Cus. dt. 27.12.2002, which clarified that for bulk liquid cargo, the shore tank receipt quantity should be the basis for customs duty assessment.

Conclusion:
The Tribunal concluded that the assessable value in the present imports was correctly determined based on the quantity of LNG discharged in India at the contracted price as per the agreement. The appeal filed by the Revenue was rejected, affirming that the duty should be paid based on the transaction value derived from the final invoices and the actual quantity unloaded at the Indian port.

Judgment Pronouncement:
The operative part of the order was pronounced in the Court on 27.3.2014, confirming the decision to base the assessment on the quantity discharged and the transaction value as per the contractual agreements.