2017 (9) TMI 1786 - Commission - Customs

Valuation of imported goods - Coal and Petcoke - inclusion of elements of freight in the assessable value - demurrage charges - applicant had not brought to the notice of Customs certain elements of cost, i.e., amount paid towards ship demurrage charges in addition to actual freight which should have been taken into account for arriving at assessable value - Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - applicant accepted the tax liability in the SCN dated 7-10-2016 and has paid an amount of ₹ 21,42,012/- (which included an amount of ₹ 2,00,874/- paid voluntarily by the applicant) as confirmed by the Revenue. The interest liability of ₹ 7,94,604/- was also paid before issue of the SCN - applicability of Rule 10 of the Customs Valuation Rules, 2007. Held that - The Bench is of the view that the applicant has made full and complete disclosure of the duty liability, co-operated with the investigation and discharged their duty liability along with interest. Accordingly, the Bench considers it as a fit case to settle the differential duty liability at ₹ 21,42,012/- as admitted by the applicant along with interest amounting to ₹ 7,94,604/-. This amount has been fully paid and the same is appropriated and adjusted towards the Customs duty and interest. Redemption fine - Held that - he amount paid subsequently to the exporter as differential freight on account of demurrage charges was not brought to the notice of the Customs leading to the short collection of Customs duty, attracting the Provisions of Section 111(m) of the Customs Act, 1962. Therefore, the Bench holds that the goods are liable for confiscation. However, as the goods had not been seized at any point of time in this case imposing any fine on the goods in lieu of confiscation does not arise. Penalty - Held that - This is a case where the applicant failed to declare ship demurrage charges, which should have been taken into account for arriving at assessable value for the purpose of charging Customs duty as per the provisions of Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - It is also brought to the notice of the Bench that out of the amount of ₹ 21,42,012/- paid towards differential Customs duty on ship demurrage charges/Lighterage, etc. an amount of ₹ 2,00,874/- pertaining to the Bill of Entry dated 16-7-2010, lay outside the statutory limit of 5 years for raising the demand. The applicant has not contested the demand though it is barred by limitation of time - The payment of differential duty to the tune of ₹ 2,00,874/- and interest thereon in respect of the imports made in July, 2010, i.e. the period beyond five years from the date of issue of the SCN amply establishes bona fides of the applicant in discharging duty liability - the Bench is inclined to take a lenient view and refrains from imposing any penalty on the applicant. The Bench is inclined to consider grant of immunity from prosecution to the Applicant in as far as this case is concerned.

Issues Involved:
1. Non-declaration of ship demurrage charges in the assessable value of imported goods.
2. Demand for differential customs duty and interest.
3. Liability for confiscation of goods.
4. Imposition of penalties under Sections 112(a) and 114A of the Customs Act, 1962.
5. Immunity from prosecution.

Issue-wise Analysis:

Non-declaration of Ship Demurrage Charges:
The applicant, M/s. The Ramco Cements Limited, imported Coal and Petcoke through various ports in India. The Directorate of Revenue Intelligence (DRI), Kolkata, developed intelligence indicating that the applicant had been evading customs duty by not declaring certain elements of freight, specifically demurrage charges. These charges should have been included in the assessable value of the goods as per Section 14 of the Customs Act, 1962, read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The applicant admitted to not declaring these charges, which resulted in the evasion of customs duty.

Demand for Differential Customs Duty and Interest:
The show cause notice (SCN) demanded customs duty amounting to ?19,41,138/- along with applicable interest of ?7,94,604/-. The applicant paid an amount of ?21,42,012/- towards differential customs duty and ?7,94,604/- towards interest before the issuance of the SCN. The applicant conceded that demurrage charges are includible in the assessable value but argued that they were under the bona fide impression that Rule 10A of the Customs Valuation Rules applied only to chartered vessels.

Liability for Confiscation of Goods:
The SCN proposed the confiscation of goods under Section 111(m) of the Customs Act, 1962, for suppressing the cost elements in the form of ship demurrage charges. The goods were not seized at any point, so the Bench held that imposing any fine in lieu of confiscation does not arise.

Imposition of Penalties:
The SCN proposed penalties under Sections 112(a) and 114A of the Customs Act, 1962, for improper importation by suppressing the elements of cost attributable to ship demurrage charges. The Bench noted that the applicant had made full and complete disclosure of the duty liability, cooperated with the investigation, and paid the differential duty and interest. Considering these factors, the Bench refrained from imposing any penalties on the applicant.

Immunity from Prosecution:
The Bench granted immunity from prosecution to the applicant under Section 127H of the Customs Act, 1962, considering the facts and circumstances of the case.

Order:
1. Customs Duty and Interest: The additional differential amount of customs duty is settled at ?21,42,012/- and the interest liability at ?7,94,604/-. Both amounts have been fully paid and appropriated towards the duty and interest liabilities.
2. Fine: The goods imported are liable for confiscation under Section 111(m) of the Customs Act, 1962. However, as there was no seizure of the goods, the question of ordering confiscation and imposing a redemption fine does not arise.
3. Penalty: No penalty is imposed on the applicant.
4. Prosecution: The applicant is granted immunity from prosecution under the Customs Act, 1962, in this case.

The immunities granted are subject to withdrawal if it is found that any material particulars have been withheld or any false evidence has been given. A copy of this order is provided to the applicant and the Jurisdictional Commissioner for implementation.

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