2006 (9) TMI 18 - AT - Central Excise

Customs - Circular is not binding on assessee, it is not open to revenue to raise the contention that is contrary to the circular - Circular was issued on 14-8-91 clarifying that demurrage charges paid to charterer of vessel is not includible in the assessable value and withdrawn as on 2.3.01, held demand is not sustainable for this period

Summary

Issues:
1. Inclusion of demurrage charges in the assessable value of imported goods.
2. Applicability of Circulars issued by the Central Board of Excise and Customs.
3. Imposition of penalties based on demurrage charges.

Issue 1: The main issue in this judgment revolved around the inclusion of demurrage charges in the assessable value of imported goods. The appellants imported liquefied propylene gas and incurred demurrage charges due to delays in unloading the goods. The Customs authorities contended that these charges should be included in the assessable value for duty calculation purposes. The Commissioner of Customs upheld this view and imposed penalties on the importers under Section 114A. However, the Appellate Tribunal, after considering the submissions of both parties, referred to Circulars issued by the Board and previous judgments, notably the Indian Oil Corporation case, to determine that demurrage charges should not be included in the assessable value of imported goods.

Issue 2: The judgment extensively discussed the applicability of Circulars issued by the Central Board of Excise and Customs in determining the inclusion of demurrage charges in the assessable value. The Board's Circular dated 14.8.91 initially excluded demurrage charges from the assessable value based on GATT valuation principles. However, this circular was later withdrawn in 2001, and a new Circular mandated the inclusion of demurrage charges in the assessable value. The Tribunal referred to the Indian Oil Corporation case, where the Supreme Court emphasized that Customs authorities must adhere to existing Circulars, and cannot impose duties contrary to them. The Tribunal concluded that as the 1991 Circular was in force during the imports in question, demurrage charges should not have been included in the assessable value.

Issue 3: The judgment also addressed the imposition of penalties based on demurrage charges. The Commissioner had imposed penalties under Section 114A, which was contested by the importers. The Tribunal, following the principles laid down in the Indian Oil Corporation case, ruled that the demands of duty and penalties based on demurrage charges were unsustainable. The Tribunal set aside the impugned order and allowed the appeals, emphasizing that as long as the Circular excluding demurrage charges remained in force, Customs authorities were bound by it. The judgment highlighted the importance of adhering to Circulars issued by the Board in determining the assessable value of imported goods and the imposition of penalties.