2019 (4) TMI 599 - AT - Customs

Valuation of imported goods - liquid bulk cargo - inclusion of demurrage charge incurred prior to import in assessable value - Held that - The issues involved in the appeal have been considered by this Tribunal in the case of BPCL Vs. CC, Cochin 2018 (5) TMI 569 - CESTAT BANGALORE and have been allowed in favour of the assessee, by holding that demurrage charges are admittedly incurred after the goods reached at Indian ports and, therefore, it is a post-importation event. Such charges, therefore, cannot form part of the transaction value - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Assessment of liquid bulk cargo based on the quantity received in the shore tank.
2. Inclusion of demurrage charges for valuation under the Customs Act, 1962.

Analysis:

Issue 1: Assessment of liquid bulk cargo based on the quantity received in the shore tank
The appellant, a Government of India undertaking, appealed against an order by the Commissioner(Appeals) regarding the assessment of imported LPG stored in bonded shore tanks. The appellant argued that the assessment should be based on the shore tank receipt quantity, while the Customs Department insisted on using the Ship Ullage quantity for valuation. The appellant cited the case of Mangalore Refinery & Petrochemicals Ltd., where the Hon'ble Supreme Court ruled in favor of the assessee regarding the assessment of liquid bulk cargo. The Tribunal, following the Supreme Court's judgment, held that the assessment should be based on the quantity of crude oil actually received in the shore tanks at the port of arrival in India. The Tribunal emphasized that the taxable event for imported goods is "import," and duty is leviable only on goods brought into India. Therefore, the quantity in the bill of lading does not necessarily reflect the quantity at the time and place of importation.

Issue 2: Inclusion of demurrage charges for valuation under the Customs Act, 1962
The second issue revolved around the inclusion of demurrage charges in the valuation of imported goods. The appellant argued that demurrage charges, being post-importation events, should not be part of the transaction value. Citing the case of CCE, Mangalore vs. MRPL, the Hon'ble Supreme Court held that demurrage charges incurred after goods reach Indian ports cannot be included in the transaction value. The Tribunal, following this precedent, ruled that demurrage charges are not includable in the valuation of crude oil for assessment purposes. Consequently, the orders of the Commissioner (A) were set aside, and the appeals were allowed based on the Supreme Court's decision.

In conclusion, the Tribunal's judgment aligned with the settled law established by the Hon'ble Supreme Court in similar cases, providing clarity on the assessment of liquid bulk cargo and the treatment of demurrage charges for valuation under the Customs Act, 1962.