2024 (12) TMI 232 - AT - Customs

Inclusion of demurrage charges in the assessable value for payment of Custom Duty - Explanation to Sub-Rule (2) of Rule 10 of the Customs Valuation (Determination of Value of Imports Goods) Rules, 2007 - invocation of extended period of limitation - confirmation of Custom Duty alongwith the interest and penalty - HELD THAT - The very issue was before the Hon ble Orissa High Court in the case of TATA STEEL LTD. AND ORS. VERSUS UNION OF INDIA AND ORS. 2019 (10) TMI 226 - ORISSA HIGH COURT . After going through the statutory provisions and the factual details, the Hon ble High Court has held ' it is well-settled principle of the statute that while 27 interpreting a statute, one has to go by the scope and object of the principal Act. Under the principal Act, while amending it on 10th October, 2007, proviso has included the costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the Rules. The demurrage has not been included as a part of cost envisaged by the legislation.' - the issue is squarely covered by the decision of the Hon ble Orissa High Court. The impugned order is set aside - appeal allowed.

Issues:
1. Inclusion of demurrage charges in the assessable value for payment of Custom Duty.
2. Payment made by the appellant before issuance of Show Cause Notice.
3. Validity of the explanation to Sub-Rule (2) of Rule 10 of the Customs Valuation Rules, 2007.
4. Interpretation of statutory provisions regarding the inclusion of demurrage charges.
5. Application of judicial precedents in similar cases.

The judgment revolves around the inclusion of demurrage charges in the assessable value for Custom Duty payment. The appellant contested the addition of demurrage charges based on an amendment to the Customs Valuation Rules. The appellant had paid the Customs Duty on the enhanced value during the investigation before the Show Cause Notice was issued. The Commissioner (Appeals) upheld the decision, leading the appellant to approach the Tribunal. The appellant's counsel argued that the issue had been settled by the Orissa High Court, which held that demurrage charges cannot be included in the valuation under the Customs Act. The Tribunal noted that the issue was settled by the Orissa High Court and a co-ordinate Bench of Tribunal Ahmedabad, leading to the decision to set aside the impugned order and allow the appeal with consequential relief.

The Tribunal referred to the Orissa High Court's decision in the case of Tata Steels Ltd & Ors. vs UOI, which held that demurrage charges cannot be included in the valuation under the Customs Act. The High Court emphasized that demurrage is a penalty and not envisaged to be included in the definition of Section 14 of the Act. The Tribunal also cited the case of CC Ahmedabad vs Reliance Industries Ltd, where it was held that the explanation to Rule 10 of the Customs Valuation Rules, 2002, including demurrage charges, was ultra vires to the Customs Act. The Tribunal, following judicial discipline, upheld the decision of the Orissa High Court and the Ahmedabad Tribunal, leading to the allowance of the present appeal and setting aside of the impugned order.

A corrigendum order was issued to rectify mistakes in the Final Order, including errors in the names of the counsel and authorized representatives, incorrect dates of hearing and decision, and a typographical error referring to "demerit charges" instead of "demurrage charges." The rectifications were allowed, correcting the errors in the Final Order.

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