2004 (5) TMI 186 - AT - Customs

Issues Involved:
1. Inclusion of barge expenses in the assessable value.
2. Inclusion of expenses on Floating Crane and other handling charges.
3. Determination of the place of importation.
4. Applicability of Rule 9(2) of the Customs Valuation Rules, 1988.
5. Legal implications of "Out of Customs Charge" order.
6. Definition and treatment of "transhipment" under the Customs Act, 1962.
7. Applicability of previous judgments and Board Circulars.

Summary:

1. Inclusion of barge expenses in the assessable value:
The lower authority included barge expenses incurred for transporting cargo from the anchorage to Vikram Jetty in the assessable value u/s 14 of the Customs Act, 1962, read with Rule 9(2)(a) of the Customs Valuation Rules, 1988. However, the Tribunal found that these expenses were incurred after the "Out of Customs Charge" order was given, which signifies the completion of customs formalities and transfer of title to the importer. Therefore, such expenses cannot be added to the assessable value.

2. Inclusion of expenses on Floating Crane and other handling charges:
The expenses on Floating Crane, payloaders/uniloaders, and manual labor for cleaning hatches were also included by the lower authority. The Tribunal held that these expenses are distinct from landing charges and are incurred before the barge expenses. They are considered as handling charges associated with the delivery of imported goods and should be included under Rule 9(2)(b), not Rule 9(2)(a).

3. Determination of the place of importation:
The lower authority concluded that the place of importation is the Vikram Jetty at Revdanda port. The Tribunal disagreed, stating that the place of importation is where the "Out of Customs Charge" order is given, which in this case was onboard the mother vessel at anchorage. Therefore, the expenses incurred after this point cannot be added to the assessable value.

4. Applicability of Rule 9(2) of the Customs Valuation Rules, 1988:
The Tribunal clarified that Rule 9(2)(a) covers the cost of transport up to the place of importation, which ends at the point where the "Out of Customs Charge" order is given. Any expenses incurred thereafter fall under Rule 9(2)(b) as loading, unloading, and handling charges, and are covered by the 1% addition already made by the appellants.

5. Legal implications of "Out of Customs Charge" order:
The Tribunal emphasized that the "Out of Customs Charge" order signifies the completion of customs formalities and transfer of title to the importer. Therefore, any expenses incurred after this order cannot be added to the assessable value.

6. Definition and treatment of "transhipment" under the Customs Act, 1962:
The Tribunal found that the goods were not transhipped as per the definition and regulations under the Customs Act, 1962. The goods were cleared on Bills of Entry with the Import General Manifest (IGM) number of the mother vessel, and Boat Notes were issued for landing, not transhipment. Therefore, the expenses cannot be treated as transhipment costs.

7. Applicability of previous judgments and Board Circulars:
The Tribunal referred to various judgments and Board Circulars, including the Supreme Court's decision in Corromondal Fertilizers Ltd., which held that landing charges cover all expenses incurred to bring goods to land. The Tribunal found that the lower authority's reliance on the case of Ispat Industries Ltd. was misplaced, as it did not consider the Supreme Court's decision and other relevant provisions.

Conclusion:
The Tribunal allowed the appeals, setting aside the orders of the lower authorities. It held that the expenses incurred after the "Out of Customs Charge" order cannot be added to the assessable value. The Tribunal remanded the cases of Reliance Industries Ltd. and Essar Steel Ltd. for re-determination of the nature of the transfer of cargo and the point of the Section 47 order in each Bill of Entry.

← Previous Next →