2004 (3) TMI 81 - HC - Customs

Valuation (Customs) - Bulk liquid cargo - validity of the public notices/circular - HELD THAT - In our opinion, the inference drawn by the C.B.E.C. from the decisions set out in the circular is not correct. In the case of NOCIL (supra), it was held that where the cargo is discharged directly into the shore tank through the regular pipeline, in view of the losses that occur during the storage and transit on account of natural causes, evaporation, etc. the quantity determined at the shore tank by dip measurement basis must be taken into account for levy of customs duty. From the said decisions, it cannot be inferred that in cases where the cargo is discharged from the vessel directly into the tanker lorries, the assessment of customs duty has to be done as per the quantity determined on the basis of ullage report. If by any method the actual quantity received by the importer can be determined; then it is not necessary to assess the cargo on the basis of the ullage reports. In other words, it cannot be said that the ullage report is the only basis for assessing the bulk liquid cargo discharged directly into the tank lorries. It is true that the quantity determined on the basis of ullage report may not be totally accurate. However, if there is no other established method available then the recourse to ullage report will have to be taken. Wherever, it is possible to ascertain the quantity actually delivered, then such method can be adopted for the purpose of assessment. Therefore, the Customs authorities are not justified in issuing public notice/circular directing the assessing authority to adopt the ullage report for assessing the bulk liquid cargo discharged directly into tank lorries. Thus, we hold that the public notices and the circular dated 27-12-2002 have to be read to the effect that wherever it is possible to determine the quantity actually delivered from the vessel into the tank lorry, then such method is to be adopted for the purpose of assessment of customs duty of bulk liquid cargo and it is not proper to direct the assessing authorities to assess only on the basis of ullage report. If there is any other recognised method that gives more accurate results, such method may be taken into account for the purpose of assessment. In the absence of any such method, the quantity determined as per the ullage can be taken into account for the purpose of assessment by ensuring that such ullage survey prior to discharge of liquid cargo is carried out under the supervision of the customs officer and signed by the consignee and the customs officer and after discharge of liquid cargo also survey is carried out in the presence of customs officer and the consignee and report is signed by both of them. The petitions are allowed in the part as indicated above.

Summary

Issues Involved:
1. Validity of public notices dated 30th March 1992 and 17th September 1997 issued by the Collector of Customs, Mumbai.
2. Validity of Circular dated 27th December 2002 issued by the Central Board of Excise & Customs (CBEC).

Summary:

Issue 1: Validity of Public Notices
The petitioners challenged the public notices dated 30th March 1992 and 17th September 1997, which mandated that customs duty on imported bulk liquid cargo be assessed based on the ullage survey report rather than the actual quantity received. The petitioners argued that the ullage survey report only provides an estimated quantity and is not an accurate measure. Historically, the B.P.T. Weigh-bridge report was used for assessing the actual quantity received, and the petitioners sought remission of duty based on this report.

Issue 2: Validity of CBEC Circular
The CBEC Circular No. 96/02 dated 27th December 2002 reiterated the requirement to assess customs duty based on the ullage survey report for bulk liquid cargo not discharged through regular pipelines. The petitioners contended that this circular misinterpreted judicial decisions, including those by the CEGAT and the Apex Court, which held that the quantity determined at the shore tank by dip measurement should be the basis for customs duty assessment when cargo is discharged through regular pipelines.

Judgment:
The court examined the validity of the public notices and the CBEC circular in light of previous judicial decisions. It was noted that the ullage survey report is a recognized method but not necessarily the most accurate. The court held that if the actual quantity received can be determined by any other recognized method, such method should be adopted for customs duty assessment. The public notices and circular should be interpreted to allow for the use of more accurate methods where available, rather than mandating the use of ullage reports exclusively.

The court concluded that the customs authorities should not be directed to assess bulk liquid cargo solely based on ullage reports if more accurate methods are available. The petitions were allowed in part, with no order as to costs.