2014 (8) TMI 614 - HC - Central Excise

Valuation of goods - Whether the finding of the Tribunal that the order of the Commissioner (Appeals) with regard to the period prior to 2.3.2001 holding that the demurrage charges are addable to the assessable value is not correct in the light of Board's Circular No.14/2001, dated 2.3.2001 - Held that - admittedly, the transactions relate to a period prior to the issuance of Circular No.14/2001-Cus, dated 2.3.2001. It is beyond any cavil that as per the circular issued by the Board of Central Excise in F.No.467/21/89-Cus.V, dated 14.8.1991, which was prevailing during the relevant period, demurrage charges and despatch money do not form part of the assessable value. In the light of the decision of the Supreme Court in Indian Oil Corporation Ltd. case, referred 2004 (2) TMI 66 - SUPREME COURT OF INDIA , the Department cannot be permitted to take a stand contrary to the instructions of the Board - Decided against Revenue.

Summary

Issues:
1. Whether demurrage charges are required to be added to the assessable value.
2. Interpretation of relevant circulars and their applicability to the case.

Analysis:
1. The main issue in this case was whether demurrage charges and despatch money should be included in the assessable value. The Tribunal considered a previous decision regarding demurrage charges incurred by oil companies and the circulars issued by the Board of Central Excise. The Tribunal held that the order of the Commissioner (Appeals) requiring the inclusion of demurrage charges and despatch money in the assessable value was incorrect, even for the period prior to 2.3.2001. This decision was challenged by the Revenue in the High Court.

2. The High Court analyzed the arguments presented by both parties and referred to the decision of the Supreme Court in a similar case involving Indian Oil Corporation. The Supreme Court had emphasized that the Revenue is bound by the circulars issued by the Board and cannot take a stand contrary to them. In this case, the transactions occurred before the issuance of Circular No.14/2001-Cus, dated 2.3.2001. The High Court held that based on the circular prevailing during the relevant period, demurrage charges and despatch money were not to be included in the assessable value. Therefore, the High Court dismissed the appeal by the Revenue and answered the substantial question of law against them.

3. The judgment highlights the importance of adhering to circulars issued by the Board and the binding nature of such circulars on the Revenue. It also underscores the principle that the Revenue cannot take a position contrary to the instructions provided in the circulars, especially when they were in operation during the relevant period. The decision provides clarity on the treatment of demurrage charges and despatch money in the assessable value, based on the prevailing circular at the time of the transactions.