2018 (2) TMI 1069 - AT - Customs

Valuation - includibility - whether the demurrage charges are to be included in the assessable value? - Held that - on identical facts, this Tribunal in the case of M/s. Bharat Petroleum Corporation Limited Versus The Commissioner of Customs And Vice-Versa 2017 (10) TMI 302 - CESTAT BANGALORE has allowed the appeal of the assessee by dropping the demurrage charges. Penalty u/s 114A also dropped. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Inclusion of demurrage charges in assessable value.
2. Imposition of penalty under Section 114A of the Customs Act.
3. Imposition of redemption fine.
4. Applicability of Section 18(3) of the Customs Act for demanding interest.

Analysis:

1. Inclusion of Demurrage Charges in Assessable Value:
The appellant, a Government of India undertaking engaged in refining and marketing petroleum products, imported LPG through IOCL on the High Sea basis. The issue arose when the DRI investigated and found that demurrage charges were not declared to Customs. The appellant contended that demurrage charges should not be included in the assessable value, citing the decision in CCE, Mangalore Vs. Mangalore Refinery Petrochemicals Ltd. The Commissioner rejected this contention, leading to the present appeal. The Tribunal, in a similar case, allowed the appeal, citing the Supreme Court's decision in Mangalore Refinery Petrochemicals Ltd. case, which held that demurrage charges post-importation cannot form part of the transaction value. Consequently, the Tribunal set aside the inclusion of demurrage charges in the assessable value.

2. Imposition of Penalty under Section 114A:
The appellant argued against the imposition of penalty under Section 114A, stating that the duty was paid before the show-cause notice was issued. The appellant also contended that the demand was not under Section 28 but under Section 18(3) of the Customs Act, making the penalty imposition unsustainable. The Tribunal, following its previous decision, dropped the penalty, stating that Section 114A was not applicable in this case.

3. Imposition of Redemption Fine:
Regarding the redemption fine, the appellant argued that it should not be imposed when goods are not available for confiscation unless seized goods are released under bond. Citing relevant case law, the Tribunal agreed with the appellant and dropped the imposition of the redemption fine.

4. Applicability of Section 18(3) for Demanding Interest:
The appellant contended that Section 18(3) inserted in 2006 would not be applicable to the import period of 2002-2004. The Tribunal, relying on precedent, set aside the interest demanded under Section 18(3) of the Customs Act.

In conclusion, the Tribunal found the impugned order unsustainable in law and allowed the appeal of the appellant, setting aside the decision and providing consequential relief, if any.