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2023 (11) TMI 783 - AT - CustomsValuation - Aviation Turbine Fuel (ATF) remained on board - conversion into domestic flight - Methodology adopted in computing assessable value on fuels - loading of the prices with 1% landing charges - 20% transportation cost - 1.125% of insurance - to be included to the transaction value for re-determining the duty liability or not - HELD THAT - The Larger Bench in the case of Jet Airways 2021 (5) TMI 908 - CESTAT MUMBAI (LB) held that No amount towards alleged transportation cost is required to be included in the value of remnant ATF under Rule 10(2) of the 2007 Rules for determining the transaction value under Section 14(1) of the Customs Act. Therefore, the notional value of transportation under proviso to Rule 10(2) of the Customs Valuation Rules, 2007 cannot be added to the transaction value. Based on the above observation of the Larger Bench of the Tribunal, Tribunal in the case of JET AIRWAYS (INDIA) LTD. VERSUS COMMISSIONER OF CUSTOMS (AIRPORT) , MUMBAI 2021 (12) TMI 971 - CESTAT MUMBAI observed that in the transaction value, methods of valuation, these costs are irrelevant and extraneous and accordingly, held that the transaction value excludes the scope for addition of freight, insurance and landing charges to the cost of supply for discharge of duty liability on the fuel available on board upon conclusion of an international leg. Thus, going by the reasoning for not adding the transportation charges, it is obvious that none of these charges can become part of transaction value as per Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. This issue is no more res integra as it is settled in favour of the appellants in the case of Jet Airways India. The impugned order set aside - appeal allowed.
Issues involved:
The issues involved in the judgment are the determination of assessable value on imported Aviation Turbine Fuel (ATF) for domestic operations and the inclusion of transportation, loading, unloading, and insurance charges in the assessable value for the purpose of customs duty calculation. Issue 1: Determination of assessable value on imported ATF for domestic operations The appellant imported ATF and a certain quantity remained on board for domestic operations. The appellant did not dispute the payment of customs duty but contested the methodology used to compute the assessable value. The show-cause notices were issued for the demand of only differential duty based on the methodology adopted in calculating the assessable value. Issue 2: Inclusion of transportation, loading, unloading, and insurance charges in the assessable value The Commissioner confirmed the demands by enhancing the value, including transportation cost, cost of insurance, and landing charges. The appellant argued that these charges should not be included as the fuel in the aircraft was never unloaded, and no handling or transportation charges were incurred on the unutilized fuel. The appellant relied on legal precedents to support their argument. The appellant's counsel contended that the assessable value cannot include transportation, insurance, loading, unloading, and handling charges as the fuel remained unutilized in the aircraft without incurring additional charges. The Authorized Representative agreed that the issues were covered by a decision of the Larger Bench regarding valuation. The main issue to be decided was whether the cost of transportation, loading/unloading/handling charges, and insurance should be added to the transaction value for re-determining the duty liability. The Tribunal referred to the decision of the Larger Bench in the case of Jet Airways, which concluded that transportation costs should not be included in the value of remnant ATF for determining the transaction value under the Customs Act. Based on the decision of the Larger Bench, it was established that transportation charges should not be added to the transaction value as per the Customs Valuation Rules. The Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeals. In conclusion, the Tribunal held that transportation, loading, unloading, and insurance charges should not be included in the assessable value for calculating customs duty on imported ATF for domestic operations, based on the precedent set by the decision of the Larger Bench.
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