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TMI Blog2019 (7) TMI 1782X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt was please to hold Explanation to sub-rule 2 of Rule 10 of Customs Valuation Rules, 2007 is bad and further declared it ultra vires the provision of Section 14 of the Customs Act and hence struck it down. Appeal allowed - decided in favor of appellant. X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant, namely, Shri Sandeep Joglekar was recorded by the DRI, Kolkata when he clarified that demurrage was not declared because demurrage was not known at the time of filing Bills of Entry. Statement of the President (Commercial), namely Shri Amol Ubhayakar was recorded by DRI, Kolkata, when he also clarified that demurrage was not known while filing bills of entry; and that as a result of negotiations between the parties, Debit Notes issued by the suppliers for demurrage were settled at 50%. He also stated that it was understood from Circular No. 38/2007 dated 09.10.2007, that only demurrage incurred in respect of time chartered vessels was covered by the Explanation, and not the Voyage Chartered Vessels; and since the imports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) ELT 214 (SC) that demurrage charges incurred after the goods reached the Indian Ports was a post importation event, and such charges were therefore not includible in the value for assessing custom duties; (iii) that the principle of valuation so settled by the Hon'ble Supreme Court was followed by this Tribunal in Bharat Petroleum Corporation Ltd., vs. CC, Kochin -2018-TIOL-1739-CESTAT-Bang. and also in Mangalore Refinery & Petrochemicals Ltd., vs. CC, Mangalore -2017-TIOL-2292-CESTAT-Bang. with reference to Rule 10(2) of the Customs Valuation Rules after its amendment in 2007; (iv) that ship demurrage charges in the appellant's case have been incurred after the ships/ vessels reached the India Port and after they were allotted a berth / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant, and was clarified by the appellant's executives also during the enquiry, the appellant was under the bonafide belief that demurrage charges for voyage charter vessels were not includible in the value of the imported goods, and the amount of demurrage was also not known to the appellant when Bills of Entry were filed and assessment was made by the proper custom officers; (x) that it was even otherwise a case where it was possible for an importer like the appellant to form a bonafide belief based on judgements of the Hon'ble Supreme Court and decisions of the Tribunal and also the circular issued by the Government, that demurrage in facts of their case was not includible in the value of the imported goods; and (xi) that the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred after the goods reach the Indian Port is a post importation event, and such charges therefore cannot form part of the transaction value. In the present case, demurrage charges were incurred after the ships/ vessels reached the Indian Port, and after they were allotted a berth/ berthing place at the Port in India; and accordingly such demurrage charges were incurred after the imported goods reached to the place of importation. 11. The Government has made the valuation rules only to include in the assessable value the demurrage for 'Time Chartered Vessels'. The Explanation has been added to Rule 10(2) of the Custom Valuation Rules only to take care of cases of imports by time chartered vessels. 12. Learned Counsel further urges th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f penalty. Therefore, it could not have been envisaged by the legislation to be included in the definition of Section 14 of the Act. However, in view of the clarifications by way of judgements of the Hon'ble Supreme Court, more particularly in the cases of Wipro Ltd. (supra), Essar Steel Ltd. (supra) and Mangalore Refinery & Petrochemicals Ltd. (supra), it is made clear that demurrage cannot be included for the purpose of valuation under the Customs Act, 1962. In that view of the matter, we are of the considered opinion that the contentions raised by the petitioner that the relevant provisions in the Principal Act is silent about the 'demurrage'; thus, it was beyond the legislative power to include it in the Rules is accepted and thus the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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