2022 (4) TMI 891 - AT - Customs

Valuation of imported goods - crude palmolein oil - whether ullage report or the shore tank report should be reckoned for determining the customs duty? - HELD THAT - It is now well settled by the Supreme Court and also accepted by the Board that when liquid cargo is imported, shore tank quantity should be considered for assessment of duty and not ullage report. The previous orders of this Tribunal followed the same. In some cases the orders of this Tribunal were also not challenged by the Revenue. The learned Commissioner (Appeals) has followed the order of this Tribunal as he is bound to as per judicial discipline. The argument of the Revenue is that the Commissionerate has now decided to challenge one of the previous orders of this Tribunal. Measurement in the shore tank being taken after cargo is settled - HELD THAT - This Tribunal had held that the measurement should be taken after the cargo is settled. Revenue s contention is that there was no such stipulation in the Board s circular. If a liquid is poured into a container, say water is filled in a bucket under a tap with high pressure, there will be some turbulence when filling and bubbles will come up. The quantity of the water in the bucket can only be measured after bubbles settle and the turbulence stops. Similarly, when oil is pumped using heavy duty pumps from the ship to the tanks, some turbulence ensues and some froth will also develop. Needless to say that the quantity of the liquid can only be measured accurately only after the liquid settles. Accurate dip measurement in the tanks and the temperature at the time of such measurement which form the basis for calculating the quantity of the liquid are possible only after the liquid settles. It is not understood how the Revenue can find fault on any direction that the measurements be taken before the turbulence ends and liquid settles. Evidently, any measurement before the liquid settles is likely to be erroneous resulting in wrong quantities being recorded than what is present in the tanks. Revenue cannot seek to collect duty based on such quantities. The commissioner has correctly mentioned in the public notice that the dip measurement must be taken after liquid is settled. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Determination of customs duty based on ullage report vs. shore tank report.
2. Whether dip measurement in shore tanks should be taken after the liquid settles.

Analysis:

Issue 1: Determination of customs duty
The case involved the import of crude palmolein oil, with the question being whether the ullage report or shore tank report should be used to determine customs duty. The Supreme Court ruled in a previous case that the shore tank report must be considered. The CBEC also issued a circular directing the same. The Tribunal, in a previous order, upheld the use of shore tank quantity for duty assessment. The respondent imported oil for manufacturing edible oils, claiming duty benefits. The Revenue argued that duty should be paid based on the shortfall between the shore tank and ullage reports. However, the Tribunal reiterated the precedence of using shore tank quantity for duty assessment, dismissing the Revenue's appeal.

Issue 2: Dip measurement in shore tanks
The Revenue contested that the Board's circular did not specify taking dip measurements after the liquid settles in shore tanks. However, the Tribunal held that accurate measurements can only be taken after the liquid settles, as turbulence and froth affect readings. The Commissioner correctly noted that measurements should be taken post-settlement. The Tribunal emphasized the importance of accurate measurements and rejected the Revenue's argument against taking measurements after settlement.

In conclusion, the Tribunal rejected all four appeals by the Revenue, upholding the precedence of using shore tank quantity for duty assessment and emphasizing the importance of taking dip measurements after the liquid settles for accurate calculations.