2019 (5) TMI 981 - AT - Customs

Valuation of imported goods - import and distribution of LPG - inclusion of canalizing charges paid to IOCL in the assessable value - computation of Landing Charges - shore quantity or invoice quantity of the liquid cargo - grant of refund on finalization of provisional assessment - levy of interest. Whether shore quantity or invoice quantity of the liquid cargo has to be considered for valuation and computation of import duties? - HELD THAT - All the assessments are to be done on the basis of shore tank quantity only - reliance placed in the decision of Hon'ble Supreme Court in the case of Mangalore Refinery Petroleum 2015 (9) TMI 245 - SUPREME COURT . Valuation - computation of Landed Cost - addition of 1% of the assessable value or the actual cost/ to arrive at the landed cost? - inclusion of Landing fees, Berthing fees and Tug attendance charges in the assessable value - HELD THAT - All these charges are not in the nature of pre-importation charges, therefore, all of them are not includable in the assessable value in terms of Rule 9(2)(b) of Customs Valuation Rules, 1988. Each of these expenses are to be separated and those items of expenses which pertain to import handling charges, handling fee, berthing fee and tug attendance fee which are in the nature of pre-importation cost only need to be included. Items of cost or expenditure with regards to the constructions and maintenance of shore tanks for storage of LPG, Transportation of LPG etc. which are in the nature of expenditure post importation need not be included - For the purposes of identifying the elements of pre-import charges or expenditure, the issue needs to go back to the original adjudicating authority. Whether the Canalization charges paid to M/s. Indian Oil Corporation Ltd. (canalizing agent), are to be added to the price to arrive at the assessable value? - HELD THAT - Such charges are includable in the assessable value - issue squarely settled by the decision in the case of Hyderabad Industries Ltd. vs. Union of India 2000 (1) TMI 46 - SUPREME COURT wherein it was held that Canalising charges are includible in the assessable value of imports. Automatic grant of refund on finalization of assessments - non-applicability of unjust enrichment - non-applicability of interest in the case of provisional assessments - Department has submitted that the issue was not taken up by the appellant before the original or appellate authority - HELD THAT - This being a question of law the appellants have in their right to raise the issue at this level. However, for a proper appreciation of the facts and for computation of the refund view to the appellants the matter needs to go back to the original authority. Appeals are allowed by way of remand to the original adjudicating authority.

Summary

Issues Involved:
1. Computation of landing charges.
2. Inclusion of canalization charges in the assessable value.
3. Basis for valuation and computation of import duties (shore tank quantity vs. invoice quantity).
4. Grant of suo motu refund on finalization of assessment.
5. Applicability of interest on duty payable on finalization of assessment.

Detailed Analysis:

1. Computation of Landing Charges:
The main issue was whether landing charges should be computed at actual costs or at 1% of the CIF value as prescribed under Rule 9(2)(b) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The Tribunal examined the agreement between BPCL and Finolex Industries Ltd. and found that only pre-importation charges such as handling fees, berthing fees, and tug attendance fees should be included in the assessable value. Post-importation expenses, such as storage and transportation costs, should not be included. The Tribunal remanded the matter to the original adjudicating authority to segregate these charges and include only the pre-importation charges in the assessable value. If actual landing charges are not available, a notional 1% of CIF value can be used as per the Supreme Court's ruling in Wipro Ltd vs. Assistant Collector of Customs (2015).

2. Inclusion of Canalization Charges:
The Tribunal held that canalization charges paid to IOCL are includable in the assessable value, as settled by the Supreme Court in Hyderabad Industries Ltd. vs. Union of India (2000).

3. Basis for Valuation and Computation of Import Duties:
The Tribunal decided that the shore tank quantity should be used for the assessment of petroleum products, based on the Supreme Court's judgment in Mangalore Refinery & Petroleum (2015). This issue was no longer res integra and was settled in favor of the appellants.

4. Grant of Suo Motu Refund on Finalization of Assessment:
The Tribunal acknowledged that the issue of automatic refund on finalization of assessments and the non-applicability of unjust enrichment was a question of law that could be raised at this level. The matter was remanded to the original authority for proper appreciation of facts and computation of the refund due to the appellants.

5. Applicability of Interest on Duty Payable on Finalization of Assessment:
The Tribunal noted that the issue of interest on duty payable before the finalization of assessment was not taken up by the appellant before the original or appellate authority. However, it allowed the appellants to raise this issue at this level and remanded it to the original authority for consideration.

Conclusion:
The appeals were allowed by way of remand to the original adjudicating authority. The Tribunal directed that assessments be finalized based on shore tank quantities and that canalization charges be included in the assessable value. The original authority was instructed to determine actual landing charges based on data provided by the appellants or use a 1% notional value if actual charges were not available. The provisional assessment was to be finalized within three months of the receipt of the order. The appeals were disposed of accordingly.

(Order pronounced in the court on 26/4/19)