2024 (6) TMI 398 - AT - Customs

Valuation of imported goods for the purpose of levy of duty - value to be adopted for the purpose of levy of duty - declared value as per the Bill of Entry or the actual payment made to the High Seas Seller by the importer - exchange rate to be applied is as on date of presentation of the Bill of Entry or on the date of actual payment by the appellant to the High Seas Seller - denial of exemption of CVD under Serial No.63 of the Notification No.4/2006 CE dated 01.03.2006. Valuation of imported goods for the purpose of levy of duty - value to be adopted for the purpose of levy of duty - whether the declared value as per the Bill of Entry or the actual payment made to the High Seas Seller by the importer? - HELD THAT - From the records, it is clear that the price of the imported product Muriate of Potash is USD 484.75 PMT and the price paid to the High Seas Seller is also USD 484.75 PMT. The differential value arose only on account of the exchange rate, the exchange rate was Rs.50.05 per US Dollar on the date of filling of the Bill of Entry i.e. 28.11.2011 and on the date of actual payment by the appellant to the High Seas Seller, the exchange rate was Rs.62.68 per US Dollar and hence, the change in value from Rs.66,87,70,836/- to 68,67,86,485/-. Exchange rate to be applied is as on date of presentation of the Bill of Entry or on the date of actual payment by the appellant to the High Seas Seller - HELD THAT - The Hon ble High Court of Calcutta in the case of Ever Bright Plastic Pvt. Ltd. Vs. Collector of Customs 1992 (9) TMI 108 - HIGH COURT AT CALCUTTA , and the Hon ble High Court of Madras in the case of Trio Marketing Pvt. Ltd. Vs. UOI 1999 (12) TMI 79 - HIGH COURT OF JUDICATURE AT MADRAS have also categorically held that the applicable exchange rate is as on the date of filing of the Bill of Entry. Denial of exemption of CVD under Serial No.63 of the Notification No.4/2006 CE dated 01.03.2006 - HELD THAT - The benefit of Notification is eligible for all those who use the goods as fertilizers or in the manufacture of other fertilizers whether directly or through the stage of an intermediate product. The appellant being a manufacturer and distributor of fertilizers having license under Fertilizers Controls Order and having cleared the same as a fertilizers to the farmers, the question of denying the benefit does not arise. Therefore, the benefit of the Notification is extended and the demand of differential duty on account of difference in the rate of exchange is set aside. Appeal allowed.

Summary

Issues:
1. Differential duty demand based on discrepancy in declared value and actual payment.
2. Determination of exchange rate for duty calculation.
3. Denial of exemption of CVD under a specific notification.

Detailed Analysis:
1. The appellant, M/s. Rashtriya Chemicals and Fertilizers Ltd, filed a Bill of Entry for the clearance of Muriate of Potash, self-assessed at USD 484.75 per Metric Ton (PMT). Subsequently, it was discovered that the actual payment made to the seller was higher than the declared value, leading to a demand for differential duty under the Customs Act, 1962. The appellant contested this, arguing that the value declared was correct based on the High Seas Sales Agreement and exchange rate at the time of filing the Bill of Entry.

2. The second issue revolved around the determination of the exchange rate for duty calculation. The appellant maintained that the exchange rate applicable should be as on the date of filing the Bill of Entry, citing legal provisions and precedents to support their claim. The authorities had considered the exchange rate at the time of actual payment, leading to a discrepancy in the duty amount. The appellant's reliance on relevant legal decisions supported their argument regarding the correct exchange rate to be applied.

3. The third issue pertained to the denial of exemption of CVD under a specific notification. The appellant, being a manufacturer and distributor of fertilizers with a license under Fertilizers Control Order, contended that the product in question was used as a fertilizer, making them eligible for the exemption under the notification. Additionally, the appellant argued that the second show-cause notice issued after a significant delay was barred by limitation, citing relevant legal precedents to support their position.

In the final judgment, the Tribunal considered the arguments presented by both parties. It was established that the declared value in the Bill of Entry was correct based on the High Seas Sales Agreement, and the exchange rate at the time of filing the entry should be applied for duty calculation. Furthermore, the appellant, being a manufacturer and distributor of fertilizers, was deemed eligible for the exemption under the specific notification. As a result, the demand for the payment of the differential duty was set aside, and the appeal was allowed in favor of the appellant.