2018 (11) TMI 1476 - AT - Customs

Valuation - customs duty on the quantity of remnant ATF on arrival at Chennai Airport - addition / includibility of freight insurance and landing charges in assessable value - Held that - The issue is squarely covered by the decision in the case of Interglobe Aviation Ltd. Vs CC New Delhi 2017 (9) TMI 926 - CESTAT NEW DELHI where it was held that such remnant fuel though construed to be an imported item for the purpose of customs duty no freight element is attributable and cannot be added to form part of the assessable value. There cannot be any addition of freight / insurance or landing charges to the cost of ATF for arriving at the assessable value of the remnant ATF. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Dispute over the inclusion of freight, insurance, and landing charges in the assessable value of remnant Aviation Turbine Fuel (ATF) upon arrival at Chennai Airport for airlines operating flights to foreign destinations.

Analysis:

Issue 1: Inclusion of freight, insurance, and landing charges in the assessable value of ATF:
The appeals involved a dispute regarding the addition of freight, insurance, and landing charges to the assessable value of remnant ATF upon arrival at Chennai Airport. The adjudicating authorities had upheld the inclusion of these components in the assessable value, resulting in duty liability and penalties under Sections 112(a) and 114A of the Customs Act, 1962. The Revenue had filed appeals against Jet Airways, InterGlobe Aviation, and Spicejet Ltd. for the imposition of penalties under Section 114A, which were subsequently deleted via corrigenda.

Issue 2: Tribunal's Decision and Legal Interpretation:
During the hearing, the Ld. Consultant for the assessees cited a Tribunal decision in the case of Interglobe Aviation Ltd. Vs CC New Delhi, which held that no freight element could be attributed to the remnant fuel in the tank of aircraft for the purpose of customs duty valuation. The Tribunal emphasized that the remnant fuel was not transported as cargo or goods for freight purposes, and hence, no freight element should be added to the assessable value. The Tribunal also referenced a Supreme Court decision in Wipro Ltd., emphasizing the importance of determining the actual price paid for imported goods. The Tribunal concluded that there should be no addition of freight, insurance, or landing charges to the cost of ATF for calculating the assessable value.

Issue 3: Tribunal's Decision and Dismissal of Appeals:
Based on the legal interpretations and precedents, the Tribunal set aside the impugned orders in their entirety, leading to the dismissal of Revenue appeals against Jet Airways and InterGlobe Aviation. The Tribunal also dismissed the Revenue appeal against Spicejet Ltd., stating that there was no justification for imposing penalties under Section 114A, especially when the demands were found to be unsustainable.

In conclusion, the Tribunal allowed the assessees' appeals with consequential benefits and dismissed the Revenue appeals, thereby resolving the dispute over the inclusion of freight, insurance, and landing charges in the assessable value of remnant ATF for airlines operating flights to foreign destinations from Chennai Airport.