2008 (10) TMI 233 - AT - Customs

Valuation high sea sale agreement appellant recovered various charges from high sea seller - The charges are - (1) Demurrage charges; (2) Bank charges; (3) facilitation charges; (4) Survey charges held that - In terms of the Agreement, it is true that all these charges have necessarily to be paid - IOCL themselves have stated that these charges are towards offering services like tender negotiations, participation in International bidding by IOCL for effecting the import of the furnace oil. - Therefore, these are definitely the service charges and cannot be post-importation charges - It is abundantly clear that these charges are paid as a condition of sale by the appellant who is a buyer to the IOCL who is a seller. Therefore, all these charges have to be or includible in the assessable value in terms of Rule 9(1)(e) of the Customs Valuation Rules, 1988 suppression of facts upheld demand beyond normal period of limitation upheld

Issues Involved:

1. Inclusion of Demurrage Charges in Assessable Value.
2. Inclusion of Facilitation Charges in Assessable Value.
3. Inclusion of Bank Charges in Assessable Value.
4. Inclusion of Survey Fees in Assessable Value.
5. Allegation of Suppression of Facts and Invocation of Extended Period for Duty Demand.
6. Imposition of Penalty.

Detailed Analysis:

1. Inclusion of Demurrage Charges in Assessable Value:

The appellants argued that demurrage charges are not ordinarily incurred at the time of import and are only due to inevitable reasons. They cited previous Tribunal decisions supporting their stance. However, the Tribunal found that the demurrage charges, as indicated in the final invoice, are a condition of sale and hence includible in the assessable value under Rule 9(1)(e) of the Customs Valuation Rules. The Tribunal noted that these charges were routinely paid for every consignment, indicating they were not extraordinary.

2. Inclusion of Facilitation Charges in Assessable Value:

The appellants contended that facilitation charges, which included various inland operations, should not be included in the assessable value as they were not a condition of sale. They referred to several clauses in their agreements to support this. However, the Tribunal held that these charges are indeed pre-importation expenses and are a condition of sale, making them includible in the assessable value. The Tribunal relied on the Supreme Court decision in Hyderabad Industries Ltd. v. UOI, which held that service charges paid to canalizing agents are includible in the assessable value.

3. Inclusion of Bank Charges in Assessable Value:

The appellants argued that bank charges are not a condition of sale and cited the Tribunal's decision in Exim India Oil Co. Ltd. v. CC (Port), Calcutta. However, the Tribunal found that bank charges are an essential component of the final price and are paid as a condition of sale, thereby includible in the assessable value under Rule 9(1)(e) of the Customs Valuation Rules.

4. Inclusion of Survey Fees in Assessable Value:

The appellants argued that survey fees, paid to IOCL, are not related to the price of the imported goods and should not be included in the assessable value. The Tribunal, however, found that survey fees are part of the final price charged for the imported cargo and are a condition of sale, making them includible under Rule 9(1)(e) of the Customs Valuation Rules.

5. Allegation of Suppression of Facts and Invocation of Extended Period for Duty Demand:

The Tribunal noted that the appellants did not disclose the final invoice or the Fuel Supply Agreements to the Customs Authorities, thereby suppressing vital information. This justified the invocation of the extended period for duty demand under Section 28 of the Customs Act. The Tribunal found that the suppression of facts was established.

6. Imposition of Penalty:

The Tribunal acknowledged that the appellants could have passed on the burden of duty to Karnataka Power Transmission Corporation, which warranted a lenient view on the imposition of penalty. The penalty was reduced from Rs. 59,77,432/- to Rs. 5,00,000/-.

Conclusion:

The Tribunal confirmed the duty demand for the inclusion of demurrage charges, facilitation charges, bank charges, and survey fees in the assessable value. The penalty was reduced, and the appeal was disposed of accordingly. The Tribunal emphasized that the charges were a condition of sale and thus includible in the assessable value under Rule 9(1)(e) of the Customs Valuation Rules. The suppression of facts justified the invocation of the extended period for duty demand.

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