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TMI Blog2017 (9) TMI 1786X X X X Extracts X X X X X X X X Extracts X X X X ..... Road, Vijayawada, (ii) the Joint/Additional Commissioner of Customs, Custom House, Port Area, Vishakapattnam and (iii) The Joint/Additional Commissioner of Customs, Custom House, New Harbour Estate, Tuticorin. The show cause notice has been issued demanding Customs duty to the tune of Rs. 19,41,138/- along with applicable interest. Penalty was also proposed under Section 112(a) and Section 114A of the Customs Act, 1962. The SCN further proposes appropriation of an amount of Rs. 21,42,012/- paid by the applicant towards differential Customs duty which included Rs. 2,00,874/- paid voluntarily by the applicant which falls outside the statutory limit of 5 years for raising the demand. 1.2 Intelligence was developed by the Directorate of Revenue Intelligence, Kolkata to the effect that M/s. Ramco Cements Ltd., have been importing Coal and Petcoke through various ports in India and have been evading duty of Customs by not declaring certain elements of freight which would have been taken into account for the purpose of determination of assessable value of the goods for the purpose of payment of Customs duty as per provisions of Section 14 of the Customs Act, 1962 read with Customs V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terage etc., an amount of Rs. 2,00,874/- pertaining to the Bill of Entry dated 16-7-2010, falls outside the statutory limit of 5 years for raising the demand. 1.8 The present show cause notice has been issued demanding Customs duty to the tune of Rs. 19,41,138/- (Rs. 2,05,857/- pertaining to Krishnapatnam Port + Rs. 1,06,250/- pertaining to Vishakapatnam Port + Rs. 16,29,031/- pertaining to Tuticorin Port) along with applicable interest of Rs. 7,94,604/- (Rs. 2,93,889.55 pertaining to Krishnapatnam Port + Rs. 22,251.30 pertaining to Vishakapatinam Port + Rs. 4,78,463.30 pertaining to Tuticorin Port). The applicant has further paid an amount of Rs. 2,00,874/- for such imports made through Krishnapatnam Port towards Customs duty on demurrage made against vessel named Alpha Happiness vide Bill of Entry dated 16-7-2010 which falls outside the statutory limit of 5 years for the demand. The present SCN is issued demanding Customs duty of Rs. 19,41,138/- only. 1.9 Therefore, M/s. The Ramco Cements Ltd., was called upon to Show Cause to the Joint/Additional Commissioner of Customs (Preventive) as to why : (a) Differential duty of Customs amounting to Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual value of the goods for the purpose of determination of duty and ultimately resulted in short payment of Customs duty recoverable under Section 28(4) of the Customs Act, 1962, and (g) Penalty should not be imposed upon them under Section 112(a) of the Customs Act, 1962, for improper importation of goods by reasons of mis-representation and suppression of facts by not taking into account cost of ship demurrage charges in the assessable value of the goods as elaborated above resulting in nonpayment of duty, which rendered the goods liable to confiscation under Section 111(m) of the Customs Act, 1962 and duty of Customs payable under Section 28(4) of the Act ibid. AND 1.10 M/s. The Ramco Cements Ltd. was also called upon to Show Cause to the Joint/Additional Commissioner of Customs, Customs House, Port Area, Vishakhapattanam-530035, within 30 days of receipt of this notice as to why :- (a) Differential duty of Customs amounting to Rs. 1,06,250/- payable on such goods imported through Vishakhapatnam Seaport, on account of element of cost attributable to the ship demurrage charges paid by the importer over and above the norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aking into account cost of ship demurrage charges in the assessable value of the goods as elaborated above resulting in non-payment of duty, which rendered the goods liable to confiscation under Section 111(m) of the Customs Act, 1962 and duty of Customs payable under Section 28(4) of the Act ibid. AND 1.11 M/s. The Ramco Cements Ltd., was also called upon to Show Cause to the Joint/Additional Commissioner of Customs, Customs House, New Harbour Estate, Tuticorin - 628 004, within 30 days of receipt of this notice as to why :- (a) Differential duty of Customs amounting to Rs. 16,29,031/- payable on such goods imported through Tuticorin Seaport, on account of element of cost attributable to the ship demurrage charges paid by the importer over and above the normal price of the goods including freight to the suppliers which was deliberately suppressed by the importer in contravention to the provisions of Sections 14(1) 17 & 46 of the Customs Act, 1962, and also in violation of Rule 3 & Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 should not be demanded under Section 28(4) of the Customs Act, 1962; (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alia submitted that : * All imports were in pursuance of a firm's order placed on the overseas suppliers and the terms of the order/agreement contained the circumstances under which demurrage charges were payable. * They concede that demurrage which were paid to the overseas suppliers long after the clearance of the goods after assessment, is includible in the assessable value and therefore, differential duty ought to have been paid on such demurrage charges. * That they were under the bona fide impression that Rule 10A of the Customs Valuation Rules which seeks to include demurrage charges in the assessable value for payment of duty is applicable only when such demurrage charges were paid in the case of Chartered Vessels. * All their imports were not under chartered vessels and therefore differential duty on demurrage charges as and when paid to the overseas supplier was not paid. * They became aware of their requirement of payment of duty on all demurrage charges only when Customs authorities having jurisdiction over Karaikkal Port advised them of the legal provisions relating to valuation of imported goods and differential duty on demurrages relating to imports made t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s numbered as S.A. Cus/26-28/2017-SC. Based on the reply received to the First Notice, the application was allowed to be proceeded with by the Bench vide letter dated 3-5-2017. Report from jurisdictional Commissioner 4.1 The jurisdictional Commissioner vide C.No. VIII/17/36/2017 Legal dated 27-6-2017 reported that : * M/s. Ramco Cements Ltd. imported Coal and Petcoke which is used in the manufacture of cement through various Ports in India. * They had not declared certain elements of cost, i.e., amount paid towards ship demurrage charges, which should have been taken into account for arriving at assessable value of the goods for the purpose of payment of Customs duty in terms of Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods), Rule, 2007. * The applicant never declared their liability of Customs duty on such ship demurrage charges in the past 10 years. * Only after initiating investigation and detailed scrutiny of the documents by the Officers of DRI, that the leakage of Revenue came to ligh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Customs Valuation Rules, 2007. Further, the applicant while importing the impugned goods calculated freight by taking into consideration standard freight paid by them but did not disclose demurrage paid by the shipper and such elements of costs being paid over and above the standard freight also constitute part of the extended freight and therefore a part of assessable value of the goods. 5.3 He further, submitted that the applicant firm paid an amount of Rs. 21,42,012/- towards differential amount of Customs duty and also paid an amount of Rs. 7,94,904/- towards interest. It has been pointed out that out of a amount of Rs. 21,42,012/- paid towards differential Customs duty on ship demurrage charges/ Lighterage etc., an amount of Rs. 2,00,874/- pertaining to the Bill of Entry dated 16-7-2010, falls outside the statutory limit of 5 years for raising the demand. 5.4 The Learned Consultant also made the following further averments viz., * They concede that demurrage charges which were paid to the overseas suppliers long after the clearance of the goods after assessment, is includible in the assessable value. However, due to long ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s misdeclared the actual value of the goods for the purpose of determination of duty and which ultimately resulted in short payment of Customs duty, 100% penalty should be rightly imposed on them in terms of Section 114A of the Customs Act, 1962 and penalty should be imposed under Section 112(a) of the Customs Act for improper importation of goods. Findings of the Bench 6.1 The Bench has carefully gone through the records of the case, and taken note of the submissions made on behalf of the applicant and the Revenue. Customs Duty and Interest 6.2 This is a case where the applicant had imported Coal and Petcoke through various Ports in India and such imported goods were used in the manufacture of cement. The applicant had not brought to the notice of Customs certain elements of cost, i.e., amount paid towards ship demurrage charges in addition to actual freight which should have been taken into account for arriving at assessable value as per provisions of Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Investigations conducted by the Directorate of Revenue Intelligence, Kolkata culminated in the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The applicant stated that they became aware of their requirement of payment of duty on all demurrage charges only when Customs authorities having jurisdiction over Karaikkal Port advised them of the legal provisions relating to valuation of imported goods and differential duty on demurrages relating to imports made through Karaikkal. Immediately after that the applicant took necessary steps to calculate the duty on the demurrage charges for all their imports made through various ports. In the meantime they received summons dated 2-8-2016 from DRI, Kolkata asking them to appear on 26-8-2016. The Bench observes that the applicant had paid the differential duty of Rs. 21,42,012/ - and interest of Rs. 7,94,604/- in respect of 59 Bills of Entry between 24-8-2016 and 26-8-2016 i.e., before their appearance before DRI, Kolkata. 6.7 It is also brought to the notice of the Bench that out of the amount of Rs. 21,42,012/- paid towards differential Customs duty on ship demurrage charges/Lighterage, etc. an amount of Rs. 2,00,874/- pertaining to the Bill of Entry dated 16-7-2010, lay outside the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X
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