2023 (12) TMI 446 - AT - Customs

Aircraft pertaining to international flights - excess ATF on board - Determination of cost of transportation - Inclusion of cost of transportation of remnant ATF in the IOCL price, on which the Customs duty has been discharged - Rule 10 (2) of the Valuation Rules, 2007 - Confiscation of goods - levy of redemption fine and penalty - HELD THAT - The issue which is to be decided by us is whether the transportation charges in terms of Rule 10 (b) of the Valuation Rules, 2007, are to be includable in the assessable value or not. The said issue has been examined by the Larger Bench of this Tribunal in the assessee s own case M/S JET AIRWAYS (INDIA) LIMITED VERSUS COMMISSIONER OF CUSTOMS (I) (AIRPORT) , MUMBAI 2021 (5) TMI 908 - CESTAT MUMBAI (LB) , wherein this Tribunal has held ATF which is filled in the fuel tank of the aircraft is actually required to fly the aircraft and is a consumable for the airlines. It cannot, in such circumstances, be urged that ATF is being transported through the aircraft. A different situation would, however, arise if an oil company specifically imports ATF in large containers/tanker as goods or as cargo, for the purpose of selling the same to airlines. There can be no doubt that in such a situation the cost of transportation for import of ATF would have to be included in the transaction value for the purpose of determining the customs duty liability. As the issue has already been settled by the Larger Bench of this Tribunal in the assessee s own case, therefore, the transportation cost is not to be included in the value of remnant ATF for determining the assessable value in this case. The demand of duty confirmed against the assessee is set aside - As no demand is sustainable, consequently, no penalty is imposable on the assessee - appeal filed by assessee is allowed.

Summary

Issues involved:
The judgment involves issues related to the liability of including transportation charges in the assessable value of ATF, duty payment on imported ATF, failure to file necessary documents under the Customs Act, and the imposition of penalty and redemption fine.

Liability of including transportation charges in assessable value:
The case involved the question of whether transportation charges should be included in the assessable value of ATF. The Tribunal referred to a previous decision and held that transportation cost should not be included in the value of remnant ATF for determining the assessable value.

Duty payment on imported ATF:
The appellant, an Air-flight operator, had imported ATF for their flights from foreign destinations to Kolkata. The issue arose regarding the duty payment on the excess fuel on board in the aircraft, which was considered as an import. The appellant had not filed the necessary documents, such as the Bill of Entry, for clearance of the imported ATF before commencing domestic operations. The Tribunal found that the appellant had short paid duty on ATF by not including transportation and insurance charges in the assessable value.

Imposition of penalty and redemption fine:
The adjudicating authority had imposed a penalty of Rs. 2.00 Crores on the appellant for the short payment of duty on ATF. However, the Tribunal set aside the demand of duty and held that no penalty was imposable as the demand was not sustainable. The Tribunal also ruled that the goods were not liable for confiscation and no redemption fine was imposed on the appellant.

Conclusion:
In conclusion, the Tribunal allowed the appeal filed by the appellant, dismissing the appeal filed by the Revenue. The judgment clarified the liability of including transportation charges in the assessable value of ATF, addressed the duty payment issues on imported ATF, and determined the imposition of penalty and redemption fine.