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TMI Blog2019 (10) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant states that they are into the business of supplying edible oil and they import edible grade Crude Oil without any separate charges for transportation from other countries to Indian port on CIF basis. When it enters the Indian Port, Basic Customs Duly and applicable Cess along with IGST is paid. b. Section 15 of the Customs Valuation Rules provides for the value to be considered for imposing the Basic Customs Duty. The applicable rule reads as under: As per Rule 10(2) Customs Valuation (Determination of Value of Import Goods) Rules. 2007, "The value of the imported goods shall be the value of such goods, for delivery at the time and place of importation and shall include- (a) The cost of transport of the imported goods to the place of importation (b) ...................; and (c) ................... Provided that- (i) Where the cost of transport referred to in clause (a) is not ascertainable, such cost shall be twenty percent of the 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 percent of the free on board value of the goods plus cost o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of such article fixed under sub-section (2) of that section, as the case may be; and (b) any duly of customs chargeable on that article under section 12 of the Customs Act, 1962, and. any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but does not include the tax referred to in sub-section (7) or the cess referred to in sub-section." g. From the combined reading of the above provisions, it can be deduced that IGST is to be charged on the value of import of goods. Also, it is provided that the value of the goods for the purpose of levying integrated tax shall be assessable value as ascertained under section 14(1) of the Act, which also includes the cost of transportation. Further, it also includes the cost of transportation. Further, it is also includes Customs Duty levied under the Act, and other duty chargeable on the said goods under any law for the time being in force. h. In the instant case, the applicant states that for the purpose of valuation of goods for customs and IGST, CIF value is to be considered which is inclusive of the freight element. The freight element of the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied." l. As can be seen from the above, it is an inclusive definition and there is no provision provided anywhere in the Act to expand its coverage either. Where consideration is payable, he will be the recipient. In the appellant's case, the supplier enters into an agreement with the Foreign Shipping Company and the due consideration is paid by them only. Applying the above definition in the appellant's case, the recipient of supply shall be the exporter itself. However, the said notification has specified the 'importer' as the 'recipient' of supply which is not in line with the definition or act and therefore in the opinion of the said entry is ultra vires to the provisions of the Act and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary." Inferring from the above definitions, the principal supply in the appellant's scenario shall be the import of goods which forms a predominant element of the composite supply and insurance, freight being ancillary services provided. Further section 8 of the CGST Act provides for the computation of tax liability on composite supply. The section reads as under: "Section 8. Tax liability on composite and mixed supplies. - The tax liability on a composite or a mixed supply shall be determined in the following manner, namely: (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax." q. In line with the provisions, while importing the goods, IGST is applied at the rate of tax as is applicable on the principal supply, i.e. 5%. Having fulfilled the requirement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the same provisions under the KGST Act. 5.3 The issues involved are examined. The Entry No. 9(ii) of Notification No. 8/2017- Integrated Tax (Rate) dated 28.06.2017 reads as under: SI. No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 9 Heading 9965 (Goods Transport Services) (ii) Transport of goods in a vessel including services provided or agreed to be provided by a person located in non-taxable territory to a person located in non taxable territory' by way of transportation of goods by a vessel from a place -outside India upto the customs station of clearance in India 5 Provided that credit of input tax charged on goods (other than on ships, vessels, including bulk carriers and tankers) used in supplying the service has not been taken Explanation: This condition will not apply where the supplier of service is located in non-taxable territory. |Please refer to Explanation no. iv] 5.4 It is not disputed by the applicant that the transaction is liable to tax under, entry no. 10 of Notification No. 10/2017 - Integrated Tax (Rate) dated 28.06.2017, reverse charge mechanism. The said entry reads as under: SI. No. Category of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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