TMI Blog2008 (10) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... , Member (T) Shri G. Shiva Dass, Advocate, for the Appellant. Shri K. Sambi Reddi, JDR, for the Respondent. [Order per : T.K. Jayaraman, Member (T)].- This appeal has been filed against the Order-in-Original No. 01/2007 dated 9-2-2007 passed by the Commissioner of Customs, Mangalore. 2. Shri G. Shiva Dass, the learned Advocate, appeared on behalf of the appellant and Shri K. Sambi Reddi, the learned JDR, for the Revenue. 3. We heard both sides. 4. The appellants are a Public Limited Company. They have entered into an Agreement with M/s. Karnataka Power Transmission Corporation Ltd. (KPTCL in short) for the supply of electricity. They import Furnace Oil through New Mangalore Port and Karwar Port for generation of power in their Power Plant. They had entered into an Agreement with M/s. Indian Oil Corporation Ltd. (IOCL in short) for supply of the Furnace Oil. M/s. IOCL would be importing, in terms of the Agreement between the appellant and IOCL, Furnace oil, which in turn, will be supplied to the appellants. In fact, there were Fuel Supply Agreement between IOCL and the appellant and in respect of each consignment imported and supplied to the appellants, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that once a price, in terms of Section 14 is available for assessment, the paid price alone needs to be the basis for payment of duty. He stated that only w.e.f. 10-10-2007, when the new Section 14 came into effect, the definition of Transaction Value refers to the actual price paid or payable to be determined in each transaction instead of the price available in International market. The proviso to Section 14(1) as introduced w.e.f. 10-10-2007 includes any amount paid or payable for various cost and services which could get included of the said payment has a condition for sale of the goods. He said however, as far as the present appeal is concerned, it is prior to 10-10-2007 and to the cost insurance freight, nothing more can be added. He stated that in the present case, the CIF price is indeed available and the appellants correctly paid the duty on the CIF value. He also stated that there is no condition of sale by the exporter that the payments are required to be paid to him before the sale of the goods either to IOCL or to the appellants. Therefore the said Rule 9(1)(e) of the Customs Valuation Rules could not have been invoked. He said that there is actually no condition of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Naphtha or its Alternative Fuel @ 3% (b) for FO or its Alternative Fuel @ 2.75%, of the Landed cost. 22.4.3. Any other charge as mutually agreed upon (iii) Further, the learned Advocate referred to the procedures as detailed in Annexure-3 of the paper book Vol.-I, which is reproduced below: "To obtain details of competitive offers and to give information relating to it to the appellant and negotiate the terms and conditions which are not favourable to the appellants as compared to the market terms and conditions; negotiate the terms and conditions with the foreign seller; monitor the quantity and quality of fuel imported and advise the appellant regarding the actual amount payable through the letter of credit arrange for an independent qualified person to sample and test the fuel prior to its discharge at disport and deliver the results of such sampling to the appellants; vessels in compliance of the fuel supply contract; arrange for coordination for transfer of custody of the imported fuel through suitable arrangements; arrange for receipt and delivery of documentation regarding the offloading and supply of imported fuel; arrange for liaison import with respect to safety, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of import since every attempt is always made to berth the vessel and unload the cargo and release the vessel within the stipulated lay time. It is only due to inevitable reasons that the unloading of cargo takes place after the lay time. It was also submitted that the appellants are ordinarily required to unload the cargo from the vessel within the specified time which was adhered to in certain shipments. Payment of demurrage charges, which are in 'extraordinary situations' would not render the CIF price without the demurrage charges as not being in conformity with Section 14 of the Customs act. He also relied on the following decisions of the Tribunal:- (a) Shine Petroleum Pvt. Ltd. Anr. v. CC, Mangalore - 2008 (224) E.L.T. 143 (Tri.-Bang.) = 2008 (85) RLT 86 (CESTAT-Bang.) (b) MGM International Exports Ltd. Ors. v. CC, Mangalore - 2008 (228) E.L.T. 61 (Tri.-Bang.) = 2008 (87) RLT 63 (CESTAT-Bang.) (v) As regards Bank charges, the learned Advocate stated that bank charges are at the rate of 0.1% of the C F value charged by the IOCL to the appellants to defray approximate expenses incurred by IOCL due to receipt of consideration from the appellants and making of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the price actually paid or payable. The appellants submit that as long as the amount in question has not been made by them as a condition of sale for the imported goods, the addition of survey fees incurred on a notional basis particularly when it includes an element of survey fees at the discharge port is not includible. (viii) The learned Advocate stated that the Department has relied on the decision of the Hon'ble Supreme Court in the case of Hyderabad Industries Ltd. v. UOI - 2000 (115) E.L.T. 593 (S.C.). He distinguished the facts of the case. In the Hyderabad Industries case, the question was whether the commission paid to the canalizing agency was includible in the assessable value. In that case, the goods were required to be imported only through a designated canalizing agent. In the present case, the goods are neither required to be imported through a canalizing agent as per the Policy nor has IOCL acted as a canalizing agent. The appellants were otherwise free to import the goods on their own. There was no relationship of agent and principal between MMTC and Hyderabad Industries. In the present case, the terms of the agreement noted supra clearly points out to such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing decisions were relied on:- (a) Hindustan Syringes Pvt. Ltd. v. CCE, New Delhi - 1998 (29) RLT 323 (CECAT); (b) Rajasthan Cylinders Containers v. CCE, Jaipur - 2004 (163) E.L.T. 96 (Tri.-Del.); (c) Continental Foundation Jt. Venture v. CCE, Chandigarh -I - 2007 (216) E.L.T. 177 (S.C.). It was also urged that mens rea is an essential ingredient to invoke the longer period under Section 28 of the Customs Act. Also, the very nature of the different elements in question which, either do not have any nexus with the price or with the goods which were purchased from the foreign supplier or had a relation to the post importation activities, itself led to a bona fide belief that they are not includible. In any case, the declaration furnished by IOCL, which was filed by the appellants along with the Bill of Entry, clearly indicated that the high sea sales price was provisional. The department, on scrutiny of the declaration of the IOCL, that the high sea sale price was provisional, could have on its own motion called for the documents now being subjected to scrutiny and arrived at the same conclusion as in the impugned order at the time of finalization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's decisions. He made a point that the Commissioner has explained as to how the decision of the Hon'ble Supreme Court in the case of CC, Calcutta v. Indian Oil Corporation - 2004 (165) E.L.T. 257 (S.C.) is not applicable. Similarly, he stated that the survey charges are a part of the charges paid towards the final price of the commodity. The transaction is on high sea sale basis and hence, survey fees is a part of the final price of the imported cargo and as far as the seller IOCL is concerned, it is a condition of sale. Therefore, survey fees is also includible. 6.3 Similarly, with regard to the Bank charges, it was submitted that the said charges are essential component of the final price of the imported goods and it is not the interest charged for deferred payment. Hence, the bank charges payable have very clear nexus with the transaction value. Further, he stated that the ratio of the EXIM India Oil Co. Ltd. (cited supra) case relied on by the learned Advocate is not applicable, as in the instant case, payments are made as a condition of sale of the imported goods and the same constitutes the final price of the imported goods. In the case of EXIM India Oil, the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... othing is said about the various charges like bank charges, facilitation charges, demurrage, survey etc. which are the matters of dispute here. A final invoice is also raised by the Indian Oil Corporation to the appellant. It is on record that the final invoice has not been revealed to the Customs before finalization of the assessment. It is also on record that the Fuel Supply Agreements have not been brought to the notice of the Revenue. To that extent, there is justification to say that certain important and vital facts have been suppressed from the Customs Authorities. The Commissioner has clearly outlined that. The appellants cannot say that they had placed all these agreements before the Customs Authorities. Therefore, the Suppression of facts is established. 7.1 As regards the includibility of the charges themselves, we find that in the Hyderabad Industries case, the Hon'ble Supreme Court has decided that the service charges paid to the canalizing agents are includible in the assessable value. The learned Advocate has tried to distinguish the facts of the Hyderabad case from the present case. In our view, the fact that MMTC was a canalizing agent and the services charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the ISPAT Industries case. In our view, the ratio of the said case cannot be made applicable because this is a case of high sea transaction and the case-law applicable which is more appropriate in the facts of the present case is M/s Hyderabad Industries v. UOI. The Commissioner has rightly relied on it. As regards the other charges like bank charges, demurrage, survey, etc., we are of the view that they are definitely to be paid as condition of sale of the goods to the buyer. Therefore, they are clearly includible in terms of 9(1)(e). Even with regard to the demurrage charges, though this Tribunal, in the case-laws quoted by the learned advocate, has held that they are not includible before a particular date because they are charges of extraordinary nature and they are not paid ordinarily, il (sic) the present case, we are finding that the so called demurrage charges are not the actuals. There is no evidence to show that they are actuals. For every consignment, the appellants are required to pay at a fixed percentage all these charges viz demurrage charges, facilitation charges, bank charges, survey charges, etc. Moreover, it cannot be said that the survey charges are pos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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