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TMI Blog2013 (10) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... nothing to do with regard to importation of the goods for the purpose of assessment of customs duty. Customs duty is charged on the basis of the value described in the bill of lading. If there is any under-invoicing made, the authority is entitled to take appropriate assessment to find the actual value. In no stretch of imagination the demurrage can be included in the value of the goods for the purpose of assessment of customs duty under Section 14(1) of the Customs Act, 1962 or any other provision of the said Act - Following decision of HINDUSTAN LEVER LIMITED Versus UNION OF INDIA [2002 (2) TMI 111 - HIGH COURT AT CALCUTTA] - Decided against revenue. - C/1134/2005 - Misc. Order No. M/13674/2013-WZB/AHD - Dated:- 7-8-2013 - G Raghuram , M V Ravindran And H K Thakur, JJ. For the Appellant : Shri K Sivakumar, AR For the Respondent : Shri P M Dave, Adv. PER : M V Ravindran The issue referred to the Larger Bench in this case is as follows: "When the circular issued by the Board vide 14/2001-Cus. dated 02.03.2001 communicated the decision that demurrage charges are includible in the assessable value, whether demurrage charges can be excluded from assessable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional Commissioner (A.R.) on the other hand would submit that the Board's circular No.26/2006-Cus. dated 26.09.06 is very clear which would indicate that the pending assessments prior to 2001 were governed by the provisions, which do not contemplate for inclusion of demurrage charges while from 02.03.2001 till September 2006, the provisions of Section 14 read with Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 would indicate that cost of transportation of the goods should be included. It is his submission that the ship demurrage charges are nothing but freight charges and the amount is paid by the importer is for the goods. It is his submission that as per the provisions of Customs Valuation (Determination of Price of Imported Goods) Rules, all the charges that are incurred for the delivery of goods at place of importation needs to be included and provisional assessments pending during the period 02.03.01 to 26.09.06 has to be finalised accordingly. 6. We gave anxious consideration to the argument put forth by both sides and also went through the case laws, Board's circulars cited by them. The referral Bench has doubted the correctness of the decision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to in clause (c) is not ascertainable, such cost shall be 1.125% of free on board value of the goods; Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods: Provided also that where the free on board value of the goods is not ascertainable, the costs referred to in clause (a) shall be twenty per cent of the free on board value of the goods plus cost of insurance for clause (i) above and the cost referred to in clause (c) shall be 1.125% of the free on board value of the goods plus cost of transport for clause (iii) above. " 8. On plain reading of the above said rule, we find that the said rules contemplate for inclusion of cost of transport of the goods imported. CBEC circular dated 26.09.06 indicates that the demurrage charges are required to be included in the assessable value under Section 14 of the Customs Act, 1962 by virtue of Rule 9 (2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. On holistic reading relevant portion of the rule as reproduced above, we find that the said rule does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation, the cost of freight incurred in the movement of container from the port of entry to the Inland Container Depot or Container Freight Station shall not be included in the cost of transport referred to in clause (a). Explanation.- The cost of transport of the imported goods referred to in clause (a) includes the ship demurrage charges on charted vessels, lighterage or barge charges." 10. It can be seen from the above reproduced provisions of Rule 10 (2) of the Customs Valuation Rules, 2007, the said rules are paramateria to the earlier provisions and it is seen that it includes an explanation which specifically talks about inclusion of ship demurrage charges lighterage or barge charges in the cost of transport of the imported goods. Both sides could not lay on record, any material to hold these provisions were applicable retrospectively. 11. We find strong force in the contentions raised by the ld. counsel as to the judgment of the Apex Court in the case of Ispat Industries Ltd. (supra) wherein their lordships were considering a similar issue would cover the case of the assessee. In the Ispat Industries Ltd. case, their lordships were considering as to whether the fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessable value for discharge of customs duty. Prior to that date, in our view, the ship demurrage charges could not have been included in the assessable value of the goods imported. 13. Our above view is also fortified by the decision of the Hon'ble High Court of Kolkata in the case of Hindustan Lever Ltd. (supra). Hon'ble High Court in that case was considering an identical issue of non inclusion of the demurrage charges paid to the port trust authority. The Hon'ble High Court in paragraph 9 held as under: "9. Value of the goods for the purpose of assessment of Customs Duty has been defined under Section 14(1) of the Customs Act, 1962. According to Section 14(1) of the Customs Act value of the goods means price at which such goods are ordinarily sold or offered for sale for delivery at the time and place of importation or exportation. When the goods are offered for sale at the place of importation it includes freight charges and as such the freight is included in the value of the said goods. Demurrage is an eventuality which causes not due to importation or exportation of the goods. The goods are imported as and when it arrives at the port. Unloading of such consignment is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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