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2019 (4) TMI 2132 - AT - CustomsEnhancement of the assessable value for the purpose of levy of customs duty - ATF remaining with the aircraft coming from international run and being used for domestic flights - to be loaded with cost of transportation loading and unloading and handling charges as well as cost of insurance or not - HELD THAT - The issue is squarely covered by this Tribunal s decision in the case of M/S. INTER GLOBE AVIATION LIMITED VERSUS CC NEW DELHI 2017 (9) TMI 926 - CESTAT NEW DELHI where it was held that There is no freight involved with reference to left over fuel in the tank of an operating aircraft. Hence there is no question such freight being not ascertainable and hence addition of 20% notional freight. Appeal allowed.
Issues involved:
Customs duty valuation on Air Turbine Fuel (ATF) remaining in aircraft after international flights for domestic use. Analysis: Issue 1: Customs Duty Valuation The case involved determining the assessable value for customs duty on ATF remaining in an aircraft after international flights for domestic use. The appellant, a government-owned air carrier, argued that residual fuel in the aircraft did not involve refueling activity or loading costs, and therefore, no additional charges should be added to the invoice value. The appellant cited a previous Tribunal decision to support their claim that if no freight element is involved, Rule 10(2) of the Customs Valuation Rules should not apply. The Departmental Representative also acknowledged that the issue had been previously settled by the Tribunal. Issue 2: Application of Customs Valuation Rules The Tribunal analyzed the application of Rule 10(2) of the Customs Valuation Rules, emphasizing that the residual ATF in the aircraft was not transported as cargo but was an integral part of the aircraft for propulsion. The Tribunal referred to the Supreme Court's decision in Wipro Ltd. case, highlighting that the closest proximity to the actual price should be sought when determining the value of imported goods. It was noted that no freight element was attributable to the fuel in the aircraft's tank, and therefore, the addition of a notional freight charge was not justified. Issue 3: Penalty under Section 112 The Tribunal also addressed the issue of penalty under Section 112, finding that the appellant had not violated any procedures or evaded customs duty. The Tribunal noted that the appellant had consistently followed the procedure of filing details and paying duty, which had been accepted by the Department for many years. As no loss of revenue was alleged except for the non-addition of notional freight in the ATF value, the Tribunal concluded that imposing a penalty under Section 112 was not justified. Conclusion Based on the precedent set by a previous Tribunal decision and the legal principles discussed, the Tribunal allowed all the appeals, setting aside the Order-in-Originals. The Tribunal's decision was grounded in the interpretation of customs valuation rules, the absence of a freight element in the residual ATF, and the lack of procedural violations warranting a penalty under Section 112. This comprehensive analysis outlines the key aspects of the judgment, including the issues involved, arguments presented by the parties, legal principles applied, and the Tribunal's decision based on the interpretation of customs duty valuation rules and penalty provisions.
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