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2014 (4) TMI 658 - AT - CustomsExclusion from assessable value u/s 14 of the Customs Act - Consideration of FOB price as cum-duty price as it includes the export duty - Held that - It is not in dispute that the time and place of export referred to u/s 14 are, respectively, the time and place of shipment of the goods - The price of the goods at the time and place of shipment is its FOB price, whether paid or payable - The law declares that this shall be the transaction value for the purpose of levy of export duty - It does not make provision for abatement of duty element from the FOB price so as to arrive at the assessable value for the purpose of levy of export duty - The provisions of Section 14 are clear and free from any ambiguity. Necessity of incidence of duty to be passed on Held that - Judgment in Chhotabhai Jethabhai Patel & Co. vs. UOI & Anr., 1961 (12) TMI 1 - SUPREME COURT OF INDIA followed - To qualify as Customs (Export) Duty, it is not necessary that the incidence of duty should always be passed on, so as to satisfy the economists principle of Indirect Tax - On the contrary, the present export duty on Iron Ore could have been levied by the legislature to discourage export of Iron Ore from the Country, with an objective to make it unviable for exporters, who ultimately have been intended to be saddled with the levy, instead of passing on the burden to the purchaser No substance in the plea of the Appellant that FOB price be treated as cum-duty price and not the transaction value, as prescribed under Section 14 of the Customs Act, 1962 - Appeals are rejected Decided against appellants.
Issues Involved:
1. Whether the FOB price should be considered as cum-duty price for the purpose of determining the assessable value under Section 14 of the Customs Act, 1962. 2. Whether the nature of Customs Duty as an indirect tax affects its determination under Section 14 of the Customs Act, 1962. Detailed Analysis: Issue 1: FOB Price as Cum-Duty Price The appellant, an exporter of iron ore fines, argued that the FOB price declared in the shipping bills should be treated as cum-duty price, meaning it includes the export duty and should be excluded when arriving at the assessable value under Section 14 of the Customs Act, 1962. The Department, however, rejected this contention based on a Board's Circular and assessed the shipping bills considering the FOB price as the transaction value. The Tribunal analyzed the contract provisions which stipulated that all levies on export in the country of origin would be borne by the seller and all import levies by the buyer. This indicated that the FOB price received by the appellants was the price paid by the overseas buyers, without any abatement for export duty. Section 14 of the Customs Act specifies that the transaction value for export duty is the price paid or payable at the time and place of export, which is the FOB price. The Tribunal found no provision in the law allowing for the deduction of the duty element from the FOB price to determine the assessable value. The Tribunal referred to the Supreme Court's interpretation that clear statutory language leaves no room for courts to amend or alter provisions, and thus, the FOB price must be taken as the transaction value without abatement. Issue 2: Nature of Customs Duty as an Indirect Tax The appellant argued that as Customs Duty is an indirect tax, it should be passed on to the buyer. If it cannot be passed on, the FOB price should be considered as cum-duty price. The Tribunal rejected this argument, citing Supreme Court rulings that the inability to pass on the tax does not change its nature as an indirect tax. The Tribunal noted that even if market conditions or other laws prevent passing on the tax, it remains an indirect tax. The Tribunal also mentioned that the legislature might have intended to levy export duty on iron ore to make exports unviable, thereby imposing the burden on exporters rather than passing it on to buyers. The Tribunal concluded that the FOB price is the transaction value under Section 14 of the Customs Act, 1962, and does not include any duty element. Therefore, the appeals were rejected. Conclusion: The Tribunal held that the FOB price should be considered as the transaction value for the purpose of export duty under Section 14 of the Customs Act, 1962, without any abatement for the duty element. The nature of Customs Duty as an indirect tax does not necessitate that it be passed on to the buyer, and the inability to do so does not alter its classification. Consequently, the appeals were dismissed.
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