2016 (1) TMI 325 - SC - Customs

Valuation of imported goods - whether ship demurrage charges paid on the import of the goods are to be included in the assessable value of the goods imported for customs duty purposes - during this period the goods could not be cleared - Held that - it is not even necessary to go into the various nuances of the matter as we are of the opinion that these appeals are bound to fail on one simple ground. The demurrage charges are admittedly incurred after the goods reached at Indian ports and therefore it is a post-importation event. Such charges therefore cannot form part of the transaction value. Issue in this behalf is settled by this very Bench in the case of Commissioner of Customs Ahmedabad v. M/s. Essar Steel Ltd. 2015 (4) TMI 486 - SUPREME COURT - Decided against the revenue.

Summary

Issues involved:
Whether ship demurrage charges paid by the importer on the import of goods should be included in the assessable value of the goods for customs duty purposes.

Analysis:
The case involved the importer, M/s. Mangalore Refinery and Petrochemicals Limited, who imported crude oil and warehoused it under provisional assessment. The customs authorities determined the relevant quantity for assessment based on the shore tank quantity of crude oil. The importer was required to pay duty on the full value paid for the Bill of Lading quantity, regardless of any shortage in the received quantity. The issue of declared shore tank quantity correction was not addressed in these appeals but in a separate batch. During the import period, the importer incurred demurrage charges, among other fees. The Revenue contended that these demurrage charges should be included in the assessable value for customs duty levy. A show-cause notice was issued, resulting in an order confirming the demand. The importer appealed to the Commissioner of Customs (Appeals) and then to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT held that the demurrage charges were includible in the transaction value based on the amount paid on the Bill of Lading quantity, citing a previous order in the same case.

The Supreme Court analyzed the matter and concluded that the demurrage charges, being incurred after the goods reached Indian ports, constituted a post-importation event and could not form part of the transaction value. The Court referred to a previous judgment in Commissioner of Customs, Ahmedabad v. M/s. Essar Steel Ltd., which settled the issue that such charges should not be included in the transaction value. Therefore, the Court dismissed the appeals based on this ground, following the precedent set by the earlier judgment.

In summary, the Supreme Court clarified that demurrage charges incurred post-importation should not be included in the assessable value of imported goods for customs duty purposes. The Court's decision was based on the principle that such charges are not part of the transaction value and are considered a post-importation event. The judgment emphasized the importance of following established legal precedents in determining the assessable value for customs duty levy, ultimately leading to the dismissal of the appeals in this case.