2024 (3) TMI 28 - AT - Customs

Levy of customs duty - Aviation Turbine Fuel (ATF) - confiscation u/s 111 (f) (j) and (m) - penalty - Whether fine is required to be imposed on the non-prohibited goods once held confiscated and whether fine in lieu of confiscation of ATF is required to be imposed by the Commissioner - inclusion of freight insurance and landing charges as to the FOB value to determine the duty on the ATF - HELD THAT - As per section 125 when goods are confiscated an option may be given in case of prohibited goods and shall be given in the case of other goods to the importer to pay a redemption fine in lieu of confiscation. If the importer opts to pay the redemption fine and pays it, the goods will be returned to the importer. If the importer does not opt to pay the redemption fine, the goods will stand confiscated. In this case, although the goods were confiscated it was only a notional confiscation because the goods were not available at all. The case of the Revenue is the redemption fine must have been imposed in lieu of confiscation. We do not find any force in this submission of the Revenue. If the redemption fine is imposed, it cannot be extracted from the respondents because redemption fine is only an option and the respondent may not opt for it. If the respondents opts for it and pays the redemption fine then Revenue will have to return the confiscated goods which the Revenue cannot do in this case because the goods no longer exist. Valuation - The cost of the freight, transit insurance and the landing charges being ascertainable as NIL, they cannot be included in the value of the ATF. In the appellant s own case in Customs Appeal, this Tribunal by its final order 2018 (4) TMI 785 - CESTAT NEW DELHI held that the cost of freight, insurance and landing charges need not be included while arising the duty on the ATF consumed in the fuel tank of the aircraft. This Tribunal has also held so in final order in the appellant s own case 2019 (4) TMI 2132 - CESTAT NEW DELHI . Thus, we find no force in the appeal of the Revenue. Accordingly, the appeal is dismissed and the impugned order is upheld with consequential relief, if any, to the respondent - The miscellaneous application also stands disposed of.

Summary

Issues Involved:
1. Whether fine is required to be imposed on the non-prohibited goods once held confiscated.
2. Whether freight, insurance, and landing charges are required to be added to the assessable value of ATF.

Summary:

Issue 1: Imposition of Fine on Non-Prohibited Goods Once Held Confiscated
The Revenue appealed against the order dated 27.04.2007 by the Commissioner of Customs, Jodhpur, which held that Aviation Turbine Fuel (ATF) worth Rs. 6,41,93,889/- was liable for confiscation under section 111 (f), (j), and (m) of the Customs Act, 1962, confirmed the demand of customs duty amounting to Rs. 2,02,70,358/-, and imposed a penalty of Rs. 2,02,70,358/- under section 114A of the Act. The Commissioner did not impose any redemption fine, reasoning that the goods were not physically available for confiscation. The Revenue contended that redemption fine should be imposed even if the goods were not physically available, citing several precedents.

The Tribunal held that since the fuel was already consumed, it was not physically available for confiscation. The Tribunal found no force in the Revenue's submission for imposing redemption fine, as the fine is an option for the importer and the goods, if confiscated, would need to be returned upon payment of the fine, which was not possible in this case.

Issue 2: Addition of Freight, Insurance, and Landing Charges to Assessable Value of ATF
The Revenue argued that the Adjudicating Authority erred in calculating the duty liability based on the FOB value of the goods without including freight, insurance, and landing charges, which should be added to the assessable value as per section 14 of the Customs Act read with Rule 9 (2) of the Customs Valuation Rules, 1988.

The Tribunal noted that the actual freight, insurance, and landing charges for the ATF in the aircraft's fuel tank were ascertainable as NIL. It referenced previous decisions in the respondent's own cases, which held that these charges need not be included in the assessable value of ATF consumed during domestic flights.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the impugned order, and concluded that no redemption fine was required in the absence of physically available goods and that freight, insurance, and landing charges should not be added to the assessable value of ATF. The miscellaneous application was also disposed of.