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TMI Blog2019 (9) TMI 1533X X X X Extracts X X X X X X X X Extracts X X X X ..... ely incurred demurrage charges and on being pointed out by the department they have paid the customs duty even on the demurrage charges incurred by them. It is the case of the department in the show cause notice that the appellant should also have paid 1% landing charges on demurrage charges. On being pointed out they have paid customs duty on 1% demurrage charges reckoning the same as landing charges. The appellant is only contesting the imposition of penalty under section 114A of the Customs Act, 1962 alleging that they have suppressed the information from the department and it only came to light on investigation by the SIIB of the Custom House. He would submit that the entire basis for the allegation is that the demurrage charges includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent and in the manner specified in the Rules. The demurrage has not been included as a part of cost envisaged by the legislation. Further, it is a kind of penalty. Therefore, it could not have been envisaged by the legislation to be included in the definition of Section 14 of the Act. However, in view of the clarifications by way of judgments of the Hon'ble Supreme Court, more particularly in the cases of Wipro Ltd. (supra), Essar Steel Ltd. (supra) and Mangalore Refinery & Petrochemicals Ltd. (supra), it is made clear that demurrage cannot be included for the purpose of valuation under the Customs Act, 1962. In that view of the matter, we are of the considered opinion that the contentions raised by the petitioner that the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of importation. Whereas fundamental principle or basis remains unaltered insofar as other two costs, viz., the cost of transportation and the cost of insurance stipulated in clauses (a) and (c) of sub-rule (2) are concerned. In respect of these two costs, provision is retained by specifying that they would be applicable only if the actual cost is not ascertainable. In contrast, there is a complete deviation and departure insofar as loading, unloading and handling charges are concerned. The proviso now stipulates 1% of the free on board value of the goods irrespective of the fact whether actual cost is ascertainable or not. Having referred to the scheme of Section 14 of the Rules in detail above, this cannot be countenanced. This prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost incurred towards landing charges is ascertainable, 1% cannot be included on notional basis. In their case they have already included 1% charges on FOB value. They have not incurred any landing charges on the demurrage charges which are only a form of penalty paid for delaying the ship. Even following this judgment of Hon'ble Apex Court, no customs duty can be charged on 1% of demurrage charges. 6. Learned departmental representative agrees with the facts of the case as narrated by the learned counsel for the appellant and reiterates the arguments of the impugned order. 7. I have considered the arguments on both sides and perused the records. The only question to be decided is whether the penalty under section 114A can be imposed upon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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