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TMI Blog2018 (9) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... s were passed by any authority. Based on the above observations, the application is 'admitted' to pronounce advance ruling. 1. SUBMISSION OF THE APPLICANT: 1. The applicant has sought an Advance Ruling on the applicability of Ocean freight Charges and System of double taxation with respect to import of raw materials of fertilizers. The Applicant is engaged in the trading business of goods like DAP, MOP. The said goods are purchased from a country outside India and imported into India. The applicable rate of IGST (import as well as on sale) on DAP and MOP is 5%. The said goods are imported either on CIF (Cost Insurance and Freight) basis or on FOB (Free on Board) basis. 2 Statement of facts:- While importing the said goods on CIF basis, the supplier/ exporter located in the foreign country is liable to bear the cost of transportation of goods, from the respective country upto Indian ports. Hence, for the transportation of the goods, the supplier/ exporter avails the services of a foreign shipping company, for bringing the said goods to India in a vessel. The services by the foreign shipping entity of transportation of goods in a vessel to a port in India is an 'inter-state sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis, the Applicant (importer) is liable to bear the cost of transportation of goods from the respective country upto Indian ports. Hence, for the transportation of the goods, the Applicant (importer) avails the services of a shipping entity for bringing the said goods to India in a vessel. In case the said shipping company is located outside India, then the Applicant importer pays the GST applicable on the supply of services of transportation of goods in a vessel on reverse charge basis in terms of Section 5(3) of the IGST Act. Moreover, upon importation of the goods, customs duty is payable on the said goods at the time of clearance of the said goods. As per Section 7 of the IGST Act, import of goods will be considered as an inter-state supply. Hence, IGST is leviable on the same. However, as per the provisions of proviso to Section 5(1) of the IGST Act, the same is levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975 (hereinafter referred to as the Customs Tariff Act') as amended by the Taxation Laws (Amendment) Act, 2017 (hereinafter referred to as the 'Amendment Act'), which levies the additional duty on the goods imported into t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods-(1) For the purposes of the Customs Tariff Act, 1975, or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf: Provided that such transaction value in the case of imported goods shall include, in addition to the price as a foresaid, any amount paid or payable for 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 made in this behalf: As per section 14(1) of the Customs Act, the value of imported article shall be the 'transaction value'. The 'tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersonal hearing was given to the applicant, Mr. Sanjay Jhanwar, (Advocate) and Ms. Aditi Lodha (Advocate) of applicant appeared for personal hearing on 17.08.2018. During the PH they submitted a flowchart depicting CIF and FOB. They have also submitted a Supreme Court judgement 'Govind Saran Ganga Saran v/s Commissionerate of Sales Tax and Ors' = 1985 (4) TMI 65 - SUPREME COURT. They also submitted that the case may be decided as per submission already made in the application for Advance Ruling and the case may be decided at the earliest. The jurisdictional officer in his comments has stated that the applicant in case of import of goods on CIF basis has to pay IGST on component of Ocean Freight paid by foreign supplier to the shipping company as per Notification No. 10/2017-lntegrated Tax (Rate) dated June 28, 2017. He has further stated that for determination of value of import of goods on FOB basis, the component of Ocean freight will have to be included in the value of import of goods. 5. Findings, Analysis and Conclusion: 5.1 We find that the services supplied by the foreign shipping entity of transportation of goods in a vessel to a port in India is an 'inter-state supply' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r section 12 of the Customs Act, 1962." From the proviso to Section 5(1) of IGST Act, 2017, it is clear that the levy and collection of IGST on imported goods would be in accordance with the provisions of the Customs Tariff Act, 1975 and value of imported goods will also be governed by the Customs Valuation (Determination of value of Imported Goods) Rules, 2007 issued under Customs Act, 1962. Hence valuation of imported goods is to be done by the Customs Authority under the Customs Act, 1962 and this authority is not empowered to decide on the issue of valuation of imported goods. Therefore, this authority cannot give any findings regarding exclusion of any component of expenditure upon imported goods (Ocean freight) while determining the value of imported goods at the time of import. The question raised by the applicant is regarding the determination of valuation of imported goods at the port. The issue regarding determination of value as sought by the applicant does not fall under the purview of CGST/RGST Act, 2017 as this issue should be correctly dealt as per the relevant provisions of the Customs Act, 1962. Based on above facts along with provision of law the ruling is as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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