Full Judgment Text
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CASE NO.:
Appeal (civil) 6408-6410 of 1999
PETITIONER:
THE COMMISSIONER OF CUSTOMS CHENNAI
Vs.
RESPONDENT:
M/S. YESES INTERNATIONAL
DATE OF JUDGMENT: 08/10/2001
BENCH:
N. Santosh Hegde & P. Venkatarama Reddi
JUDGMENT:
P.VENKATARAMA REDDI, J.
The respondent herein imported certain consignment of
superior kerosene oil which was sold to it by Indian Oil Corporation on high
sea sale basis. The controversy in this appeal is about the assessable value
of the imported goods under Section 14 of the Customs Act 1962. The
Assistant Commissioner of Customs assessed the value on the basis of final
invoices raised by Indian Oil Corporation, Madras, which included CIF
value, service charges plus other charges. Amongst other charges were
demurrage, wharfage and stock loss. The respondent- assessee filed an
appeal and contended inter alia that these charges were not includible in the
assessable value for the reason that they were post-importation charges and
an addition of CIF value at the rate of one percent having already been made
in terms of the Customs Valuation Rules, 1988 to cover the landing charges,
no further addition could be made under the above heads. The Appellate
Commissioner accepted the contention of the appellant and allowed the
appeal in respect of the above mentioned three items. However, the appeal
was dismissed as regards bank charges and ocean losses with which we are
not concerned. The appeal filed by the Revenue in CEGAT, Chennai Bench,
was dismissed on 12.1.1999 following its earlier decision in final order Nos.
84 and 85 of 1998 dated 16.1.1998. The learned counsel appearing for the
parties are not in a position to tell us whether that order of the Tribunal has
become final. Be that as it may, the legality of the Tribunals order dated
12.1.1999 dismissing the Revenues appeal has been assailed in this appeal
by the Revenue.
According to Section 14(1) of the Customs Act, the value for
the purpose of charging customs duty on imported goods shall be deemed to
be the price at which they are ordinarily sold or offered for sale for delivery
at the time and place of importation, in the course of international trade
provided that the seller and buyer have no mutual business interests and
price is the sole consideration for the transaction. However, sub-section (1A)
which was added to Section 14 in the year 1988 provides as follows :-
(1A) Subject to the provisions of sub-section (1), the
price referred to in that sub-section in respect of imported
goods shall be determined in accordance with the rules
made in this behalf.
Pursuant to sub-section (1A) of Section 14 and in exercise of rule making
power under Section 156, the Central Government framed the Customs
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Valuation (Department of Price of Imported Goods) Rules, 1988. The
relevant portion of Rule 9(2) is extracted hereunder:-
For the purposes of sub-section (1) and sub-section (1A)
of Section 14 of the Customs Act, 1962 (52 of 1962 and
these rules, 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) loading, unloading and handling charges associated
with the delivery of the imported goods at the place
of importation; and
(c) the cost of insurance :
Provided that
(i) where the cost of transport referred to in clause (a)
is not ascertainable, such cost shall be twenty per
cent of the free on board value of the goods;
(ii) the charges referred to in clause (b) shall be one
per cent of the free on board value of the goods
plus the cost of transport referred to in clause (a)
plus the cost of insurance referred to in clause (c);
(iii) where the cost referred to in clause © is not
ascertainable, such cost shall be 1.125% of free on
board value of the goods;
xxx xxx xxx xxx
It is not in dispute that those provisions are applicable to the
present case as the importation had taken place in 1995.
We shall now notice the findings of the Customs Authorities
and the Tribunal. The Assistant Commissioner was of the view that
whatever was charged in the final invoice including the service charges and
other charges were includible in assessable value. The Appellate
Commissioner, having noted the proposition that for ascertaining the price of
the goods under Section 14 for the purpose of determination of assessable
value one cannot go beyond the time of delivery at the place of import held
that wharfage charges and charges on account of stock loss were incurred
after landing and delivery of goods and, therefore, they were not includible
in the assessable value. The Appellate Commissioner held that those cost
factors had no relevance to the time of delivery of the goods at the place of
importation. The Tribunal (CEGAT), as already noticed, followed its earlier
order and quoted the extracts therefrom which read as under:-
We do not agree with the further submission in
the grounds that whatever has been collected by
the High seas seller from the customer would form
part of the value in terms of Section 14 of the
Customs Act read with the Customs Valuation
Rules, 1988. Wharfage charges, stock loss
expenses are essentially part of the landing
charges, which as the Commissioner (Appeals)
has rightly pointed out, have already been added
in the valuation of the goods by way of 1% of the
CIF value, in terms of the said Valuation Rules,
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1988
Thus, it is seen that the Appellate Commissioner and the Tribunal had
divergent approaches vis-Ã -vis the wharfage charges and the stock losses.
As regards demurrage charges, the learned counsel for the Revenue has
fairly stated that they cannot in any case be included in the assessable value.
Therefore, we have not referred to the findings of the Appellate Authorities
in this regard.
Learned senior counsel for the appellants placed reliance on the
decision of this Court in Garden Silk Mills Ltd. Vs. Union of India
[1999 (8) SCC 744] to support his argument that wharfage charges and
charges on account of stock-losses are includible in the assessable value as
per the methodology of valuation set out in Section 14(1). In that case, the
question arose whether the landing charges could be taken into account in
determining the assessable value of the imported goods. On a lucid analysis
of Section 14(1) (a), the Court answered that question in favour of Revenue
and observed that the value has to be determined in relation to the time
when physical delivery to the importer can take place and physical delivery
can take place only after the bill of entry, inter alia, for home consumption is
filed and it is the value at that point of time which would be relevant. It was
held that the landing charges which are imposed at or after the time of the
discharge of the goods and prior to the clearance being granted under
Section 47 of the Act, necessarily have to be taken into account in
determining the value thereof for the purpose of assessing the customs duty.
At paragraph 24, this Court approved the view taken by various High Courts
that the concept of value as understood in Section 14 of the Act necessarily
requires the landing charges to be included therein. Landing charges are
the expenditure incurred by an importer for bringing goods on board ship to
land (vide Coromandal Fertilisers Ltd. Vs. Collector of Customs [2000
(115) ELT 7]. Loading, unloading and handling charges referred to in
clause (b) of Rule 9(2) are components of such landing charges. At present,
in lieu of ascertainment of such actual landing charges, under clause (ii) to
the proviso to Rule 9(2), specified percentage is added to the value.
The question whether wharfage charges and stock loss would
form part of assessable value of imported goods did not fall for
consideration in that case. Moreover at paragraph 6, it was explicitely
stated that the Court was not concerned in that case with the Customs
Valuation Rules of 1988. It was observed :
Post 1988, therefore, the value of the
imported goods has to be determined in
accordance with the rules which, according
to the respondents, are based on the GATT
Valuation Code. With these Rules, however,
we are not concerned in the present case
because all the goods were imported prior to
the incorporation of Section 1A of Section
14 of the Act.
From the order of the Appellate Commissioner as well as
Tribunal it is clear that landing charges at fixed percentage was added to the
CIF value as provided for in Rule 9(2). Whether clause (b) of Rule 9(2)
takes within its fold the charges incurred on account of wharfage is one
aspect. Irrespective of that, if as held by the Appellate Commissioner, the
wharfage expenses and stock losses were incurred after the delivery of the
goods and on the conclusion of the event of importation, the question of
including such charges in the assessable value does not arise, even according
to the ratio of decision in Garden Silk Mills Ltd. (supra). The finding of
the Appellate Commissioner has not been assailed in the memorandum of
appeal or even in the course of arguments. Alternatively, even the finding of
the Tribunal that the disputed items are components of landing charges for
which extra one per cent was added, has not been assailed. The Revenue
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virtually invites the Court to decide a legal question in vacuum without
reference to the true factual position. The true nature of these charges and
the point of time at which they were incurred cannot be appreciated without
any details and relevant material before us. Even the pleadings do not bring
out the material particulars. In these circumstances, we have no option but
to dismiss the appeals. It is made clear that the appeals are being dismissed
for want of sufficient particulars and relevant material necessary to
appreciate the controversy in proper perspective. The findings arrived at by
the Appellate Authorities do not therefore warrant interference though, as
already indicated supra, there is divergence in the approach of the Tribunal
and that of the Commissioner (Appeals) in regard to the nature of the
disputed items.
Accordingly, the appeals are dismissed. There shall be no
order as to costs.
J.
(N. SANTOSH HEGDE)
J.
(P.VENKATARAMA REDDI)
October 08, 2001