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TMI Blog2024 (12) TMI 542X X X X Extracts X X X X X X X X Extracts X X X X ..... g has been brought on record by the Revenue to show that this amount is relatable to some other costs which are includable in the assessable value. It must be noted that only such costs and services as are covered by rule 10 of the Valuation Rules can be included in the assessable value. The additional amount paid by the appellant is towards air freight according to it. Revenue has neither any contrary assertion or evidence regarding the nature of this amount paid by the appellant but its assertion is that it is not for freight. If that be so, it is not includable in the assessable value and it will result in lowering the assessable value and the duty liability far below what the appellant is claiming and he appellant will be entitled to much larger amount as a refund. Whether, based on the documents available on record, it can be said that the amount of freight is ascertainable so as to bring the assessment of these Bills of Entry within the ambit of the fifth proviso to rule 10(2) (a) of the Valuation Rules? - HELD THAT:- The explanation of the appellant is that Add.Recov.Freight referred to is the additional recovery towards air freight. There is no assertion by the Revenue as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2022, 52352/2022, 52353/2022, 52354/2022, 52355/2022 52356/2022, 52357/2022, 52358/2022, 52359/2022, 52360/2022, 52361/2022, 52362/2022, 52363/2022, 52364/2022, 52365/2022, 52366/2022, 52367/2022, 52368/2022, 52369/2022, 52370/2022, 52371/2022, 52372/2022, 52373/2022, 52374/2022, 52375/2022, 52376/2022, 52377/2022, 52378/2022, 52379/2022, 52380/2022, 52381/2022, 52382/2022, 52383/2022, 52384/2022, 52385/2022, 52386/2022, 52387/2022, 52388/2022 HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P. V. SUBBA RAO, MEMBER ( TECHNICAL ) Shri B.L. Narasimhan, Ms. Jyoti Pal, Ms. Anjali Singh, Advocates for the Appellant Shri S.K. Rahman, Authorised Representative for the Respondent ORDER P. V. SUBBA RAO : 1. M/s. IPM India Wholesale Trading Private Limited Appellant filed these 70 appeals to assail the Order-in-Appeal Impugned order dated 30.6.2022 passed by the Commissioner (Appeals) whereby he rejected the appellant s appeals against 70 self-assessed Bills of Entry. 2. It needs to be pointed out that as per the decision of the Supreme Court in ITC Ltd. vs. Commissioner of Central Excise, Kolkata-IV 2019 (368) ELT 216 (SC) an importer can also file an appeal against its self- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 10 of the Customs Valuation(Determination of value of Imported goods) Rules, 2007 Valuation Rules and the additional amount paid towards air freight was much more, it filed appeals to the Commissioner (Appeals) seeking modification of its self-assessment. The Commissioner (Appeals) rejected appeals. Aggrieved, these appeals are filed before us. Submissions on behalf of the appellant 7. Shri B.L. Narasimhan, learned counsel for the appellant made the following submissions: (i) The appellant imports and sells cigarettes in India. During the period to March to June, 2020 it had imported cigarettes from PMPSA which supplied the cigarettes manufactured by PMPI, Philippines but the cigarettes were sent from Philippines directly to India; (ii) For this purpose, the appellant had entered into a distribution agreement with PMPSA according to which the cigarettes were to be supplied at carriage and freight (CFR) (also known as carriage paid to CPT) basis. The distribution agreement was supplemented by a price list dated 27 May, 2020 which indicated the price of the cigarettes on CPT basis. Although the price included both the cost of the cigarettes and the carriage up to the place of deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o claim refund of what is according to them was excess duty paid on freight; (c) At the time of import, the Bills of Entry were filed indicating the value of the goods as the CFR value (cum freight) indicated as CF (short form for CFR). The appellant has mentioned what they call Add. Recov. Freight amount under Misc. Charges in the Bill of Entry; (d) In the invoice, the Incoterm (International commercial terms) mentioned is CPT New Delhi and CPT means Carriage Paid To . Thus, the invoice value includes cost of transportation upto New Delhi. In the invoice Add. Recov. Freight is shown and added to the assessable value. A comparison of the Bills of Entry and invoice in one case shows as follows : Description in invoice Amount in Rs. Amount mentioned against declared column in B/E MARLBORO GOLD 6,96,540.00 Inv. Val (Invoice value) Add. Recov. Freight 9,53,386.56 Misc. charges Total Value 16,49,926.56 Ass. val (Assessable value ) (e) The invoice was raised by PMPSA which sold goods manufactured by PMPI and shipped them to the Appellant; (f) The country of origin of the goods was Philippines; (g) The airway bills did not show the amount of freight but it only stated that freight was pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions before the Tribunal. The impugned goods are coming by air from Manila, Philippines to ACC New Delhi Airport India; (r) Without prejudice to the above, relying upon the documents submitted by the appellant, it appears that the invoice is raised from Philippines to Switzerland and then, from Switzerland to India; (s) In the invoice it is mentioned that Payment to the account of Philip Morris products. SA, London, England. Thus the payment towards this amount is going to PMPSA ENGLAND and not PMPSA (Switzerland) . To that extent the appellant s submissions that goods were supplied by PMPSA Switzerland to the Appellant and the very same additional freight amount (INR 9,53,386.56) was recovered from the Appellant is wrong; (t) The value of goods mentioned in the invoice as CPT New Delhi is inclusive of freight The freight is not separately shown and hence the appellant s claim that total freight in the invoice has exceeded 20% is wrong; (u) Article 4.1 of Distribution Agreement says that PMPSA shall sell the products to IPM at prices agreed by the parties from time to time. The Price List dated 27-05-2020 publishes the CFR prices w.e.f 01-05-2020. No mention of such publicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l cost of air freight. 13. The Commissioner(Appeals) did not agree with the submissions of the appellant for the reason that the FOB value of the goods was not available and neither was the actual amount of freight paid to the airlines for transporting the cigarettes available. The relevant portions of the order is reproduced below: 5.3. The core issued in this case is to be decided whether the additional freight as claimed to have been incurred on imports by Air instead of sea is includible in assessable value in excess of 20% of FOB value? 5.4. At outset, I note that FOB value of impugned goods is not available in the instant case. The Appellant has contended that their normal practice had been to declare value on CRF basis. Further, they have contended that CFR value is invariably higher than FOB value and thus Air freight can be limited to 20% of CFR in terms of Rule 10(2) of CVR 2007. However, I find that no documentary evidence has been produced to substantiate this contention. There is no documentary evidence to establish that value (excluding Add. Recov. Freight) corresponds to CFR value. For reference, a sample invoice no. 1066201100020244 dated 22.06.2020 for Bill of Entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng.)] in support of their claim. However, I note that in 3M case, the FOB value could be arrived at by deducting freight insurance amount shown separately. In present case no such details are available and thus FOB cannot be worked out to apply Rule 10 of CVR 2007. Thus the relied upon case is distinguishable. 5.6. In view of the above, the assessments in the impugned Bills of Entry need not be altered in given circumstances. 14. Learned authorised representative for the Revenue supports the impugned order. His first assertion is that none of the documents show the FOB value of the goods and none of the documents, including the Airway Bill indicate, how much freight was actually paid to the airlines. The Airway Bill only mentions freight as agreed . The amount of freight is not ascertainable and therefore the fifth proviso to rule 10(2) (a) does not apply to this case. 15. His second submission is that as per article 4.2 of the Distribution Agreement between the appellant and its supplier, The terms of sale and delivery for all shipments of the Products shall be CFR New Delhi Airport, JNPT Nhava Sheva Port-Mumbai or another port in Mumbai (Incoterms 2000) . Thus, when the invoice s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised representative of the Revenue is that since para 4.2 of the Distribution Agreement refers to sale on CFR New Delhi Airport, any price agreed to between the parties should be taken as price for sale including air freight up to Delhi. Therefore, the additional amount paid cannot be on account of freight. For the sake of clarity, we reproduce the relevant portion of para 4.2 below: 4.2 Shipping Terms. The terms of sale and delivery for all shipments of the Products shall be CFR New Delhi airport, JNPT Nhava Sheva Port-Mumbai or another port in Mumbai (Incoterms 2000)or as the parties may otherwise agree from time to time. The method and route of shipment for all shipments of Products shall be as directed by IPM. Unless otherwise agreed in relation to any particular shipment, title to the Products shall transfer to IPM simultaneous with risk in accordance with the relevant incoterm. PMPSA shall invoice IPM upon shipment of the Products. 22. This clause also says or as agreed to by the parties . The Distribution Agreement does not restrict it to sale only on CFR New Delhi airport. Therefore, the submission of the learned authorised representative is not correct.In fact, if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 12 August, 2020 for later period. The second price list shows the FOB value per unit as Rs. 635.29. During the relevant period, the CPT value per unit is indicated as Rs. 696.54 which is only slightly higher than the FOB value for the subsequent period. Based on these documents, we are satisfied that the CPT values for the relevant period were for transport by ship or rail. Air transport is far more expensive. 26. Now we have to examine whether the contention of the appellant that the amount shown in the invoices as Add.Recov.Freight is the cost of air freight is correct or to accept the contention of the Revenue that it is not for air freight. 27. If we accept the contention of the appellant of Add. Recov.Freight , only an amount equal to 20% of the FOB value can be included in the assessable value and duty has to be re-determined. 28. If we accept the contention of the Revenue that it is not towards air freight and air freight has already been included in the CPT price, then, this amount cannot be included in the assessable value at all as there is no assertion by either side that it represents some other cost which is includable in the assessable value as per rule 10. This wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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