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TMI Blog2006 (2) TMI 518X X X X Extracts X X X X X X X X Extracts X X X X ..... n the shore tank. It was contended by the learned Advocate for the appellants that in certain cases, the quantity received is more and they are paying more duty. We feel that even in those cases where the quantity received is more, it is enough if the appellants discharge duty liability on the actual amount paid on the basis of the Bill of Lading quantity. There is no legal sanction for collecting more duty when the levy is ad valorem. The learned Advocate further contended that if the stand of the Revenue is accepted, Sections 13 23 of the Customs Act would be rendered redundant. We do not agree. Section 13 of the Customs Act makes a provision for waiver of duty on goods pilferaged after their unloading and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse. But if the goods are restored to the importer after pilferage he has to discharge the duty liability. In order to emphasis the point that no duty need be paid on goods not received, the learned Advocate has referred to Section 13 Section 23. We want to make it clear that it is not the question of demanding duty on goods not received. But it is the demand of duty on the tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. IOC used to import petroleum crude in bulk on the basis of the requirement in each refinery of the country and apportion the same to the various refineries. The foreign supplier supplies crude as per the Bill of Lading quantity. M/s. IOC makes payment to the foreign supplier on the basis of the Bill of Lading quantity, even though, the quantity received in India may be less on account of ocean loss. On the basis of the apportionment, M/s. IOC prepares derived Bill of Lading in respect of each refinery. M/s. MRPL makes the payment to IOC on the basis of the quantity shown in that derived Bill of Lading. Other refineries also follow the same practice. In terms of decided case laws and Board s Circular, in respect of liquid bulk cargo, the quantity of goods imported is equivalent to the quantity received in shore tank. The ocean loss is proportionately shared by all the refineries concerned. The point at issue is the valuation of the crude imported by MRPL. According to Revenue, irrespective of the quantity of crude received by the appellant in the shore tanks, they have to pay duty on the basis of the amount paid to IOC. On the other hand, the appellants contend that duty is payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02 (141) E.L.T. A280) (d) Mangalore Refinery Petrochemicals Ltd v. CCE [2002 (141) E.L.T. 247] The above position, has also been accepted by the department by issue of Circular No. 96/2002-Cus., dated 27-12-2002. In the above decisions, the contention of the refineries that the quantity as received in the shore tank should be the basis for assessment of Customs duty has been upheld. (iii) Section 14 of the Customs Act provides that the value of the goods sought to be imported shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation in the course of international trade. Sub-section 1A thereafter stipulates that the price of the imported goods has to be determined in accordance with the rules. Rule 3 of the Customs Valuation Rules indicates that the value of the imported goods shall be the transaction value. Rule 4 of the Customs Valuation Rules defines transaction value as under : Transaction value. (1) The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal held that in terms of Section 13 and 23 of the Customs Act, 1962 in respect of goods that have been lost due to pilferage before clearance for home consumption, the act provides for remission of duty. The Tribunal also held that in terms of Section 116 of the Customs Act, the liability on a quantity that is supplied by the supplier, but not available for delivery by the Master of the ship is on the Master and therefore, the importer cannot be held liable to pay duty on such quantity also. The Tribunal has further held that the fact that in terms of their commercial contract, the importer may be liable to make payment to the supplier on the basis of the manifested quantities cannot result in a visit of duty liability on the importer on the quantities not received. (vii) The Annexure to Order-in-Original sets out the basis for demand of duty. The demand is incorrect for the following reasons : The value considered as FOB value is actually the provisional deposit made by the appellants to the IOC before the supply of the goods. This provisional deposit later gets adjusted after taking into account the quantity actually allocated to the appellants as per the Derived Bill of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Apex Court in the Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai [2000 (122) E.L.T. 321 S.C.)] (iv) Further, by the very nature of goods certain variation between the quantity shipped and the quantity received is inevitable. In this context the respondent also places strong reliance on a decision of Calcutta Bench of CEGAT in the case of Exim Oil India Co. Ltd. v. Commissioner of Customs [2001 (131) E.L.T. 207 (T)], which dealt with the identical issue relating to imports of crude oil. Rejecting the appellant claim for the deduction of value for the deficient quantity and relying on the ratio of Apex Court judgment in Surya Roshni Ltd. case [2000 (122) E.L.T. 3 (S.C.)], the Bench observed as under : it is the entire quantity inclusive of losses which is being purchased by the appellant from IOC and for which full payment are being made by the appellant to M/s. IOC, we hold that such losses are not permissible deductions The respondent submits that the ratio of the above case would apply on all fours to the facts of the present case. The Commissioner has in fact relied upon this judgment as would be evident from Para 44 of the order. (v) The learned Consultant pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h January, 2006 was produced before the Bench. (ix) Full freight paid is includible for determining C F price for assessment in terms of explicit provision under Rule 9(2) of the Valuation Rules providing the legal basis for such inclusion. It is too fundamental to require any elaboration. There is no legal authority to apply only the proportionate reduced freight. No relief is admissible under Section 13 of the Customs Act. It is not appellant s case that the deficient quantity was pilfered after unloading the crude oil and before the proper officer passed the order or deposing the same in the bonded warehouse. Relief of duty under assumed ground of pilferage is not envisaged under Section 13 as held by the Tribunal in the case of Hindustan Motor Ltd. v. Collector of Central Excise [1990 (50) E.L.T. 322]. (x) Section 23 applies only to goods which have been brought to India according to the definition of Imported Goods in Section 2(25) of the Act. The section does not envisage suo moto action by AC of Customs. It is only when an importer satisfies the AC that any imported goods have been lost or destroyed at any time before their clearance for home consumption that the AC can remi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tanks. On this point, we repeat that there is no dispute at all. Hence, there is no need to discuss elaborately the above mentioned case laws. It is an undisputed fact that the appellants make payment on the basis of the quantity shown in the Bill of Lading. Citing Section 14 of the Customs Act and the Valuation Rules the learned Advocate urged that the transaction value of the imported goods is only the amount attributable to the quantity of the goods received in the shore tank. He placed great emphasis on the quantity received in the shore tank urging the point that no duty can be demanded on the quantity not received. He made the point that the issue is already decided by this Tribunal in the appallant s own case [2002 (141) E.L.T. 247 (Tri. - Bang) in the Final Order dated 1-1-2002. In the said order, the Tribunal has decided that the actual quantity removed from the shore tanker receipted quantities, should be only reckoned for the purposes of assessment of duty of crude oil removed from such bonded shore tanks (sic). We do not agree that the above decision of the Tribunal has decided the issue which has arisen in this case. In fact, the issue decided by the Tribunal is whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no legal sanction for collecting more duty when the levy is ad valorem. The learned Advocate further contended that if the stand of the Revenue is accepted, Sections 13 23 of the Customs Act would be rendered redundant. We do not agree. Section 13 of the Customs Act makes a provision for waiver of duty on goods pilferaged after their unloading and before the proper officer has made an order for clearance for home consumption or deposit in a warehouse. But if the goods are restored to the importer after pilferage he has to discharge the duty liability. In order to emphasis the point that no duty need be paid on goods not received, the learned Advocate has referred to Section 13 Section 23. We want to make it clear that it is not the question of demanding duty on goods not received. But it is the demand of duty on the transaction value. In spite of the ocean loss, the appellant has to make payment on the basis of the Bill of Lading quantity. Therefore this is the case where the transaction value arrived at based on the Bill of Lading quantity is payable as price for the quantity received in shore tank. The learned Consultant for the Revenue has brought to our attention to the Boar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained through shore tank measurement or any other manner. Further in respect of delivery at more than one port, the value should be apportioned based on the quantity intended to be discharged at the relevant ports. However, wherever the customs duty is leviable at specific rate, the determination of quantity would be relevant for levy of customs duty. In this regard, the contents of Para 7 of the Circular No. 96/2002, dated 27th December, 2002 may be referred to only in respect of cases where the Customs duty is leviable at specific rate. All pending provisional assessment should be finalized accordingly. 5. Circular No. 96/2002-Customs, dated 27th December, 2002 stands amended to the extent as above. 6. Receipt of the Circular may please be acknowledged. Sd/- /12-1-06 (SP. RAO) Under Secretary to the Government of India 7. The European Countries are also following the valuation system based on GATT. The question of transaction value to be adopted when the qty. of goods unloaded is smaller than the qty purchased, without affecting stipulated purchased price was referred to a Court in Germany in the case of Unifert Handels GmBH v. Hauptzollamt Munster - Case C-11/89. 8. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the consignment is unchanged. It is therefore consistent with the objectives of the community system of customs valuation to take the full price paid for payable as the basis for valuation. In the context of the present dispute, the following observations may be of academic interest. In the treatise on Customs Valuation Commentary on the GATT Customs Valuation Code authored by Saul L. Sherman and Hinrich Glashoff. There is elaborate commentary on the transaction value in respect of destroyed or lost goods. We reproduce Para 148 in the chapter relating to transaction value of the imported goods. 148. Goods lost in transit to the country of importation never enter the country and no duty is properly payable. The same will apply if the goods are fully destroyed in transit. Any duty assessed or paid in the mistaken belief that the goods were received in good condition and full quantity should be remitted or refunded. If parts of the destroyed goods are still imported, these have to be valued as such. This is true even if the buyer has the risk of loss in transit (e.g. in FOB and even in CIF sales) and therefore must pay for the goods and seek reimbursement from his insurer or the car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have already made it clear that the Revenue in the present case is not demanding duty on goods not received but only on the transaction value which is a price paid or payable for the goods received by the appellant irrespective of the quantity received by them in the sore tanks. 10. The adjudicating authority relied on the decision of the Tribunal in the case of Exim India Oil Co. Ltd. (supra) wherein it has been held as follows : 9. As regards the ocean loss we find that the Hon ble Supreme Court in the case of CCE v. Surya Roshni Ltd. - 2000 (122) E.L.T. 3 (S.C.) = 2000 (41) RLT 249 (S.C.) has laid down that the transit losses, for which payments are made by the assessee to the customers as compensation for losses cannot be deducted from the assessable value of the goods. By applying the ratio of the said decision to the facts of the instant case and by keeping in mind that it is the entire quantity inclusive of losses which is being purchased by the appellants from M/s. IOC and for which full payments are being made by the appellants to M/s. IOC we hold that such losses are not permissible deductions. In the above mentioned case, the Tribunal has relied on Apex Court decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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