2007 (10) TMI 201 - AT - Customs

Import of Super Kerosene Oil & LPG In IOC case Tribunal held that demurrage is not includable in the assessable value which was upheld by SC - amendment by circular dated Sept. 26, 2006 can t be given retrospective effect once there is a CIF contract which includes the freight, no further addition can be made to the freight - demurrage can t be considered as cost of transportation - for the relevant period (Oct. 99 to Nov. 2004) we cannot hold demurrage would be includable in AV

Summary

Issues:
1. Inclusion of demurrage charges in the assessable value of imported goods for customs duty purposes.

Analysis:
The case involved two appeals filed against Orders-in-Originals passed by the Commissioner of Customs, Mangalore, regarding the inclusion of demurrage charges in the assessable value of imported goods. The appellants imported Superior Kerosene Oil and Commercial Liquefied Petroleum Gas. The main issue was whether demurrage charges should be considered in the assessable value of imported goods for customs duty purposes.

The Revenue proceeded against the appellants by issuing show cause notices for including demurrage charges in the assessable value. The Adjudicating Authority confirmed demands, interest, and penalties for both appellants. The appellants challenged these orders and approached the Tribunal for relief.

During the hearing, the learned Advocate for the appellants argued that demurrage charges should not be included in the assessable value based on various legal precedents and circulars. The Advocate emphasized that demurrage is not a cost of transportation and should not be added to the assessable value. The departmental representative, however, referred to international understanding where demurrage is considered an extended freight and should be included in the cost of transportation.

After considering the arguments and examining the various circulars issued by the Board, the Tribunal found conflicting views on the inclusion of demurrage charges in the assessable value. The Tribunal noted that a circular issued in 2001 clarified that demurrage charges should be included in the assessable value. However, the Tribunal upheld the decision of the IOC case where demurrage charges were not considered includable in the assessable value, a decision affirmed by the Supreme Court.

Given the conflicting views and the recent amendment in Customs Valuation Rules, the Tribunal held that demurrage should not be included in the assessable value for the relevant period covered by the case. The Tribunal emphasized that the decision in the IOC case by the Tribunal, affirmed by the Supreme Court, should be applied during the relevant period. Therefore, the impugned orders were set aside, and the appeals were allowed with consequential relief.

In conclusion, the Tribunal's decision highlighted the importance of legal precedents, circulars, and the specific period in question when determining the inclusion of demurrage charges in the assessable value of imported goods for customs duty purposes.