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2019 (2) TMI 1255 - AT - CustomsValuation of imported goods - inclusion of Demurrage charges in the assessable value - Held that - The Customs (Valuation) Rules, 1988 was superseded by the Customs (Valuation) Rules, 2007 w.e.f. 10/10/2007. The Customs (Valuation) Rules, 1988 did not have specific provision for inclusion of ship demurrage charges. Such provision stands inserted only w.e.f. 10/10/2007. As such, there is no mandate for inclusion of the ship demurrage charges upto 10/10/2007. This issue was considered at length by the Larger Bench of the Tribunal in the Grasim Industries 2013 (10) TMI 246 - CESTAT AHMEDABAD , where it was held that In no stretch of imagination the demurrage can be included in the value of the goods for the purpose of assessment of customs duty under Section 14(1) of the Customs Act, 1962 or any other provision of the said Act. The Lower Authority is directed to re-assess Bills of Entry of the appellant for the period 02/03/2001 until 09/10/2007 (both days inclusive) without including the ship demurrage charges in the assessable value of the goods - appeal allowed - decided in favor of appellant.
Issues:
- Inclusion of ship demurrage charges in the assessable value of imported goods - Applicability of Customs (Valuation) Rules, 2007 - Challenge to the Commissioner (Appeals) decision Analysis: 1. Inclusion of Ship Demurrage Charges: The appeal questioned the inclusion of ship demurrage charges in the assessable value of imported goods. The dispute arose due to conflicting circulars issued by the CBEC regarding the treatment of such charges. The Hon'ble Supreme Court clarified that the circular dated 14/08/1991 was valid until it was reversed by the circular dated 02/03/2001. The Larger Bench of the Tribunal, in the case of Commissioner of Customs Vs. Grasim Industries Ltd., held that until the Notification of the Customs Valuation Rules, 2007, ship demurrage charges cannot be included in the assessable value. 2. Applicability of Customs (Valuation) Rules, 2007: The Customs (Valuation) Rules, 1988 did not have a specific provision for including ship demurrage charges. The Rules were superseded by the Customs (Valuation) Rules, 2007 from 10/10/2007, which explicitly allowed for such inclusion. The Tribunal, citing the case of Ispat Industries Ltd., emphasized that post the introduction of the 2007 Rules, ship demurrage charges need to be included in the assessable value for customs duty calculation. 3. Challenge to Commissioner (Appeals) Decision: The Commissioner (Appeals) had ruled in favor of the appellant, stating there was no justification for including ship demurrage charges. However, the appellant contended that they should benefit from the non-inclusion of such charges not only up to 26/09/2006 but also up to 09/10/2007. The appellant's representative argued that the Customs (Valuation) Rules did not mandate the inclusion of ship demurrage charges until the specific provision in Rule 10 of the 2007 Rules. In conclusion, the Tribunal, following the precedent set by the Larger Bench and the High Court of Kolkata, modified the impugned order. They directed the Lower Authority to re-assess the appellant's Bills of Entry for the period from 02/03/2001 to 09/10/2007 without including ship demurrage charges in the assessable value of the goods. The appeal was allowed in favor of the appellant.
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