9911796707
TMI Blog2004 (5) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... rges bring the imported cargo of Vikram Jetty at Revdanda Port. At the jetty, there is no stock yard for storage. There is however an arrangement of Continuous Barge Unloader (hereinafter referred to as 'CBU'), Figee Crane, H.B.L. Loader System and Conveyor Belt System installed with the help of CBU, and other instruments the cargo in the barges is loaded on to the convey belt system which moves the cargo from the jetty to the factory of the appellant to storage areas situated about 2 to 33 KMs away from the jetty. When the cargo is unloaded from the mother vessel on to the barges, the pay loaders/uniloaders belonging to the appellants are used in the hatches of the 'foreign mother vessel' to bring the cargo from the corners of the hatch to the centre of the hatch, under its mouth, to facilitate the Floating crane to lift the cargo from the hatches and discharge the same into the Barges. The cleaning of hatches is also done by these Payloaders/Uniloaders. The Barges/Floating Crane are required to be moored/unmoored, manually by the seamen, to and from the 'foreign mother vessel' at the anchorage for effective discharge of cargo, from the foreign 'mother ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported raw materials from the point of anchorage to the Vikram Jetty and they did not produce necessary documents to facilitate the working of actual expenses in respect of lapse of long period and repeated reminders, the barge expenses were taken at the rate of Rs. 96.38 per metric tonne, as the expenses incurred by another importer, M/s. Ispat Industries Ltd., Dharamtar inasmuch as it was felt that the circumstances of the barge lighterages of the present importer and that in the case of M/s. Ispat Industries Ltd. was similar. As the importer had failed to make available total expenses incurred on the Floating crane as well as failed to produce relevant documents to facilitate the working of actual expenses incurred on the use of Floating crane for transhipment of imported cargo to the barges, in spite of several letters/reminders, the expenses on Floating crane on the basis of notional hire cost/repair and maintenance expenses/overheads/bunker cost and profit margine taken to reckon the demand made. 3. The lower authority after considering the reply and hearing the importers found : (a) since the mother vessel is anchoraged 16 to 20 nautical miles away from Revdanda port, a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existed compelling reasons to attribute the meaning to the expression 'India' as comprising only of land mass and the word 'import into India' to mean when the imported goods are unloaded on the land mass and not otherwise. Therefore the definition clause was required to be abandoned and the word was required to be understood in common parlance. It was concluded that importation goods is an integrated process which culminates when the goods are landed on the landmass of India so that they can be introduced in the stream of supplies to form a part of the mass of goods within the country. Therefore it was concluded that the place of importation in this case for the purpose of Section 14 is nothing but the Vikram Jetty at Revdanda port a declared port. (f) He differentiated the case of Apar Pvt. Ltd. of the Bombay High Court [1991 (51) E.L.T. 224 (Bom.)] and found that the facts and circumstances in the present issue were different and relying upon the case of Shriram Fibres Ltd. v. Union of India, 1994 (69) E.L.T. 4 (Madras), Barium Chemicals Ltd. v. Union of India, 1988 (37) E.L.T. 327 (A.P.) and Govind Ram Aggarwal v. Collector of Customs, 1988 (35) E.L.T. 280 (Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted had failed to give correct and total information as regards the expenses incurred by them under various heads and the Chartered Accountant's Certificate submitted as regards the expenses incurred of Floating crane and fuel cost were not included while computing operational cost and since the importer had failed to give complete and total expenses incurred and considering the floating crane capacity, he found that he had no option to adhere to the theoretical method for inclusion of expenses. (j) As regards the comparison of the activity with that of M/s. Ispat Industries Ltd., as proposed in the Show Cause Notice to determine the barge expenses, he found that since the importer had failed to provide the relevant documents and the Chartered Accountant's Certificate did not reveal the total and correct expenses, and the fact that the circumstances in the operations of 'Barge lighterage' of the importer and that of M/s. Ispat Industries Ltd. was similar, the expenses incurred on such activities are comparable, the expenses of M/s. Ispat Industries Ltd. and barge lighterages calculated on the basis of actual expenses could be made applicable in the importer's ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appropriate authority in respect of the person holding the same and was valid for the day or time of seeking entry or exist. Such security officer does not by himself decide as to whether the holder of the Pass was otherwise eligible for such a pass . Similarly, the proper officer acting under Section 47 does not adjudicate. He merely sees as to whether all the prescribed formalities have been duly completed and allows the goods to go out of Customs charge if he is satisfied in this respect... . Thus this place and point of time of order under Section 47(1) would constitute 'Crossing the Customs barrier . Once the goods clear such Customs Barrier, costs incurred thereafter, by a pass holder, cannot be added by any stretch of imagination to be costs to go to add to compute the value being incurred up to the crossing of 'Customs Barrier' for Custom duty computation. The lower authorities have held and proceeded to add all such costs to be added for computation as up to delivery, that in fact and in view of the delivery being effected onboard the mother vessel cannot be upheld. (d) The lower authorities have come to a finding, as it appears from the order, by use of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not correct on facts and in law. (e) The finding in the impugned orders of the lower authority that disputed expenses are towards 'transhipment/transport' not only are not correct on facts and law but also travel beyond the Show Cause Notice issued, it cannot be upheld. Since Boat Notes used in this case are found to be in Form II issued under Boat Notes Regulation 4(ii), whereas Boat Notes for Transhipment of cargo are issued under different provision of Regulation 4(iii). 'Transhipment' of goods is governed by Goods Imported (Condition of Transport) Regulations 1995, issued by the Central Board of Excise Customs under the provisions of Section 158 of the Customs Act, 1962. These regulations provide for 'Transport' of imported goods by another vessel or by a different mode of transport i.e. Road, Sea, Air as the case may be, of imported goods brought by a vessel and mentioned separately as such in the Import General Manifest as for 'transhipment' to another Port/Custom Station and allowed by Proper Officer on separate requests made on execution of a Bond. The elaborate 'duty free clearance' of 'transhipped goods,' as provided for by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich were to be included under Valuation Rule 9 as expenses towards freight, as only those, which were incurred in ordinary circumstances and extra ordinary expenses which could not be added thereunder to enhance an assessable value. Department in the present case cannot therefore take a stand contrary to its own instructions and being bound by this Larger Bench decision, since confirmed by the Supreme Court, 2004 (165) E.L.T. 257 (S.C.), as all extraordinary costs of transport, incurred, to bring and land the goods ashore, due to the peculiar situation at a port cannot be added. After noting the provisions of the Customs Act, 1962 definition as per Section 2(23) for Import, 2(24) Import Manifest, 2(27) India, 2(28) Indian Customs Waters and the provision of Section 30 of the Customs Act, in the case of Union of India v. Mustafa Najibai Trading Co., 1998 (101) E.L.T. 529 (S.C.), after observing that Outer Anchorage, was part of Bombay Port held as follows : 25 In view of Section 30(1) of the Act the Import General Manifest should have been delivered within twenty four hours of the arrival of the vessel at the outer Anchorage. The High Court was in error in holding that the vessel wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argo have been granted after due payment and goods are allowed to be water borne, then the transport of the imported goods, would cease at that stage/place is at anchorage in this case. Further movement of the goods, would be amounting to 'shifting of the cargo' by barge to a jetty and from one jetty to another site on Ports land, within the Port area. Such shifting could be carting of cargo by water and or on land. It cannot be equated to transport of cargo, to the port of importation. The word 'transport' especially 'trans' in the New Shorter Oxford English Dictionary is defined to mean as a prefix in English language in the sense of 'across beyond in or other side' and the word 'transport' is defined to mean move or carry from one place or person to another convey across. Therefore, the term 'costs of transport of the imported goods to the place of importation' as used in Rule 9(2)(a) of the Valuation Rules would be limited to movement of cargo involving change of place from a Foreign port up to the door steps of the Indian Customs Station/Port, which would be 'outer anchorage'. All costs incurred thereafter, if any, would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case, the disputed expenses have been incurred for the purpose of landing the goods from the ship on to land i.e. terra firma. Hence, being bound and by applying the law as settled by the Apex Court in Corromondal Fertilisers Ltd. case (supra), these charges in dispute herein are nothing to be understood but 'landing charges' and be covered under Rule 9(2)(b) and not Rule 9(2)(a). However, as the appellants have already added 1% towards these charges on to value and paid duty on the same, then following the very same decision of Corromondal Fertilisers Ltd., no further amounts can be ordered to be added on to the value under Section 14 of the Customs Act, 1962 and duty demands made thereafter. (h) Stevedoring charges, as in this case, have been held and accepted as loading/unloading charges by the CBEC pursuant to judgment of Corromondal Fertilisers (supra) vide M.F. C.A (DR) Circular No 80/2002, dated 29th November, 2002 at para 4 stipulated : 4. In view of the above, it has been decided not to include the stevedoring charges, in the assessable value of the imported goods, as they are adequately covered by the one per cent of F.O.B. value levied towards loading/unloadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation from the mother vessel were for loading, unloading and handling for the delivery for the importation and therefore would warrant inclusion. We would take this as the charge and the ground for confirmation of the demand... Therefore, that was a case under Rule 9(2)(b) and not of inclusion under Rule 9(2)(a) i.e. cost of transportation. However, that Bench in para 23 of that decision, applied Rule 9(2)(a) to include the charges impugned therein, which was not the issue, as found and admitted by them to be before them or was the case of department in the notice in that case. (v) Did not consider the provision of Sections 33 and 35 of the Customs Act, 1962 have not been considered. (vi) did not consider Rule 9(2)(b). (j) The Tribunal in the case of M/s. Essar Steels Ltd. others vide Order No. CI/844 to 53/WZB/2003 [2003 (156) E.L.T. 42 (T)] wherein the issue of amount of freight costs of a time charter, the amount paid is a rent and in the facts of that case, the freight already added at 20% of FOB or as per actual freight was the entirety of the freight which could be added to the assessable value. Therein the Hon'ble Member (T) took a view that what is added to value is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at a price which includes their cost, freight and destination; and the premium on a policy c. f. insurance covering the transit; the buyer's duty is to pay the price upon delivery not on the goods, but on documents covering them, which typically include the bill of lading, policy of insurance and invoice. (41 Halsbury's Laws (4th Edn) page 612). from the aforesaid, it is clear that where the transaction value is negotiated price between the buyer and the seller, to include freight elements up to the destination stipulated in the contracts, nothing further is required to be added, when the destination is the port of import. In other words, transaction value has to be at the doorsteps of the stipulated port of destination. Therefore, additions are required to be made of transport cost up to the destination port doorsteps only under Rule 9(2)(a) and thereafter all costs incurred to bring the goods laden onboard a vessel, to be brought to land on terafirma at the appointed point of landing would be charges under Rule 9(2)(b). (l) The activity undertaken in respect of imported goods viz. taking them from onboard the mother vessel to the appointed place (Vikram jetty in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % provided and prescribed in all cases and the same said 1% is found to be included, same is not being disputed, then again adding any further costs or charges under Rule 9(2)(b) cannot be approved or resorted. All charges, costs, as incurred, are being found in this case are found to be covered by the terms used in Rule 9(2)(b), therefore they cannot be added over and above the 1% which already stands added to determine the assessable value under Section 14 of the Customs Act, 1962 read with Valuation Rules, after the substitution with effect from 5-7-1990. In this view of the finding, it is not necessary to go into the challenge of computation of each charge pleaded by the appellants. (n) The contention of the ld. DR for Revenue and the finding of the lower authority that barge charges and other charges incurred in situation where the mother vessel cannot navigate up to the declared place of unloading or does not navigate, requiring a smaller vessel (barge/lighter) to take the goods from the mother vessels position to the identified stipulated place the activity is a continuation of the cost of transportation incurred by the importer and not reimbursed by the supplier nor claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever, we are not concerned in the present case because all the goods were imported prior to the incorporation of sub-section (1A) of Section 14 of the Act. which clarified that the controversy settled by the Supreme Court therein was, as regards inclusion of 'landing charges' to determine value of imported goods prior to 1988. There is no conflict with the additions of 'landing charges'. There can be no dispute that after 1988 as per Rule 9 (4) of Valuation Rules, the charges prescribed under Rule 9(2)(a), (b) and (c) could only be added, which include 'landing charge costs.' At para 16, Garden Silk Mills Ltd.'s judgment provides - It would appear to us that the import of goods into India would commence when the same cross into the territorial waters and continues and is completed when the goods became part of the mass of goods within the country; the taxable extent being reached at the time when the goods reach the Customs barriers and the bill of entry for home consumption is filed. i.e. the point at which import commences and where the taxable extent occurs and thereafter since the activity is ongoing expenses relating to activities associated with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, and costs incurred in transporting the cargo to destination port. That case was a clear case of transhipment. In that case, the deductions from the 'transport costs' already included up to the port of destination were held to be granted, if the de-escalation clauses were entered into the relevant contracts. There cannot be a de escalation clause applicable on transport, within the same port area, as in this case. If the barge/lighter is traversing from a different Custom in India Port to the Port of actual import in India, then the law as laid in the Indian Oil Corporation Ltd.'s case [2003 (161) E.L.T. 375 (T) = 2003 (54) RLT 926 (CEGAT) would apply. It cannot apply to add barge charges as transport charges, when such charges are for movements within the same port and no transhipment is involved. (p) When Import General Manifest of foreign mother vessels have been accepted by the proper officer and entry inwards is granted, then the date of entry inward would be the date of the final noting for the advance Bills of Entry and the goods would be accepted to have been imported on that date at that port by the vessel declared in the Bill of Entry. In this case, such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ore Pellets is proposed to be anchored in the waters of B.P.T. Port at BFL and your company desires to unload the raw materials directly into the barges/lighter vessels and into the lorries parked on the wharf. Your request has been examined by this Custom House and it has been decided to allow the unloading/discharge directly into the barges. The operations can commence only after filing of the Bills of Entries in the Bombay Customs and after payment of Customs duty. The Customs Officer shall inspect the cargo on board the vessel. Thereafter, shall give pass out of customs charge. Only after completion of these formalities, the imported material shall be discharged from the mother vessel into the smaller barges. On completion of discharge of the cargo, you shall also forward the village report to this Custom House within 15 days from the date of sailing of the vessel. (iii) Appeal No. C/580/02-Mum. filed by M/s. Sandoz Textile and Appeal No. C/582/02-Mum. filed by M/s. Lavanya Holding Trading Pvt. Ltd. are allowed, in view of the findings hereinabove since the costs thereof incurred are within the Port of Magdalla (Gujarat). (iv) In Appeal No. C/380/02 of M/s. Reliance Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter, the cost can be added or not, to determine the duty after applying the findings hereinabove and in the case of Indian Oil Corporation 2003 (153) E.L.T. 626 (CEGAT) (sic). Since facts are to be established to quantify the demands of duties, if any, the order is to be set aside and the matter remitted back for redetermination, after hearing the parties. 8. Ordered accordingly. (Pronounced in Court on 21/05/2004 Krishna Kumar, Member (J) While agreeing with my learned brother, I consider it appropriate to add to enable the adjudicating authority to readjudicate the matter in respect of Appeals of Reliance Industries Ltd. and Essar Steel Ltd. :- (a) All cases where the mother vessel unloads the cargo at the anchorage of Magdalla Port (where the jetties are situated), the cost of barging operations would be clearly in the nature of loading, unloading and handling charges associated with the delivery of the imported goods for which a notional addition of 1% has already been made by the appellants themselves in the Bills of Entry and therefore no further addition on this account would be warranted. Since the impugned orders do not indicate the precise number of cases where the mot ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
