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TMI Blog2025 (4) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... imported 10 consignments of coal by gearless vessels, which in the absence of sufficient draft at the Bedi Port jetty, were anchored at the anchorage within the Bedi Port. At the anchorage point, the coal was unloaded from the mother vessel to the barges by utilizing the services of floating cranes from M / s United Shippers Ltd., Mumbai and Essar Bulk Terminal. For hiring of floating cranes, the appellant agreed to pay Rs.85/MT inclusive of all expenses to M / s United Shippers and Rs.90/MT to Essar Bulk Terminal. 3. For transporting of the coal from the anchorage point to the jetty, the barge charges were fixed and these charges were treated as cost of transportation of imported coal apart from the sea freight payable to the ship owners by the department the cost of unloading of coal from the 10 mother vessels to the barges was treated as part of transportation of goods because if vessel was equipped with a crane, the same would have been done by the vessel itself. The charges paid thus, as per department were distinct from unloading, loading and were paid as transportation charges and hence includible in assessable value. 4. At the time of provisional assessment, by the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the following judgments: * Coromondal Fertilisers Ltd. vs Collector of Customs 2000 (115) ELT. 7(S.C.) * Wipro Ltd. vs Assistant Collector of Customs 2015 (319) ELT. 177 (S.C.) * Ispat Industries vs. Commissioner of Customs, Mumbai 2006 (202) ELT 561 (S.C.) * Reliance Industries vs Commissioner of Cus. (Prev.) Ahmedabad 2004 (174) ELT. 344 (Tri-Mumbai) * Commissioner of Customs, Visakhapatnam vs. Hy Grade Pellets Ltd. 2007(211) ELT. 289 (Tri-Banglore) * Tata Yodogawa Limited vs Commissioner of CEX. and Cus, Bhubaneswar 2001 (131) ELT. 583 (Tri-Kolkata) 10. The Appellants submitted that the provisions of Section 18(2) of the Customs Act,1962 under which the differential duty is recoverable after finalization of provisional assessment and those of Section 28 and in particular of Section 28(4) ibid are mutually exclusive. The relevant date in terms of the Explanation in case of provisional assessment is when any short levy or non-levy is detected after adjustment of duty as a consequence of final assessment under Section 18 of the Customs Act, 1962. The provisions of Section 28 of the Customs Act, 1962, therefore can come into play only when there is any short-le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 2010 (255) ELT A120-SC; * Commissioner of Customs Vs. Sudarshan Cargo reported in 2010 (258) ELT 197 (Bom). 12. It was further submitted that the present case, there was neither a bond nor goods were available for confiscation. Further, this was not a case of provisional release of the goods where the goods are first seized and then released on execution of bond wherein the importer undertakes to produce the goods as and when required but a case where the goods were never available for confiscation right from the time the investigations started. In view of this, the case laws relied upon by the original authority are inapplicable and the impugned order imposing redemption fine of Rs. 2.5 lacs is totally untenable and liable to be set aside. 13. The Appellant submitted that if no differential duty is required to be paid by the Appellant under Section 18(2) of the Customs Act, 1962 as the floating crane charges are not required to be included in the assessable value, there is no question of any interest either to be payable by the Appellant under Section 18(3) read with Section 28AA of the Customs Act, 1962. 14. The Appellant also submitted that once assessments were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 2007 on 10.10.2007, all the earlier decisions given by the appellate authorities in respect of barge charges and related other matters, are irrelevant for the period on or after 10.10.2007. As in Explanation to Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 clearly mentions that the Barge charges are includible the transport cost of imported goods. The text of relevant provisions of law is mentioned below: Rule 10 (2)- For the purposes of sub-section (1) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I find that the contention of the noticee is not acceptable as the cost of Floating charges is paid by them and not paid by the supplier of the goods. Further, against this cost they have paid the less freight in comparison to the freight of geared vessel as stated in the statement of Shri Vinay Ramanlal Shah, Managing Director of noticee company recorded on 02.09.2013. Hence, this cost of Floating charges is also includable in the CIF value of the imported goods and liable for payment of customs duty. 03.03.02. The contention of the noticee that floating crane charges is part of loading and unloading charges as it is a duty of importer to make arrangement for lightarge the vessel from acnchorage point. I find that the contention of the noticee is not proper and legal as the noticee himself has contended that when the vessel comes at anchorage point it is duty of importer to lightarage the vessel and for that they hired floating crane and paid the charges towards it. The cost of lightarge of vessel is includable in the assessable value of imported goods as per explanation to Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Hence, the li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment was also affirmed by the Apex court as reported at 2008 (225) E.L.T. 337 (S.C.). I find that the facts and circumstances mentioned in the case cited by the noticee are on prior to introduction of new Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Hence, the same is not applicable in the present case as explanation under Rule 10 ibid (earlier Rule 9 of erstwhile valuation rules )was not inserted at material time. 03.03.05. It is also submitted that certain inferences have been drawn only on presumption in the SCN. For example, it has been inferred under paragraph 8 of the notice that the floating crane charge is nothing but an extended cost of freight. However, the notice does not quote any authority in support of such conclusion. I find that the director of noticee company himself stated that the floating crane charge is nothing but an extended cost of freight in his statement dated 02.09.2013 which was recorded under Section 108 of Customs Act, 1962. In number of cases it is held that the statement is valid evidence for arriving any conclusion of the facts or case. Hence, the contention of the noticee is not acceptable for present plea. It f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the floating crane charges are liable for inclusion of transport cost of imported goods and the same is a part of assessable value. Ongoing through Section 111(m) of the Customs Act, 1962, it is observed that if any goods which do not correspond in respect of value or any other particular with the entry made under this Act, then the goods are liable for confiscation. The commission/omission on the part of the noticee, i.e., mis- declaration in respect of value of goods in the bills of entry is squarely covered under section 111(m) of the Customs Act, 1962. However, the goods imported under Bill of Entry mentioned in Annexure A to the Show Cause Notice are already confiscated and redemption fine in lieu of confiscation imposed under Section 125 ibid vide OIO No. 09/Commr/2014 dated 23.05.2014. Hence, I cannot ordered for second time confiscation of said goods and also not imposed redemption fine in lieu of confiscation under Section 125 of the Customs Act, 1962. 03.05. As regards the interest I find that the interest is compensatory in nature, which is imposed on the assessee/importer who has withheld the payment of any tax or duty and such liability arises automatically by ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore loading and unloading charges have to be construed accordingly at the port which is constituted at the land mass of particular State or Union territory.The contention of the parties that their notional charges of loading and unloading included the ones that were occurred at the anchorage of mother vessel or of shifting through floating crane does not appear to be correct. In Coromondal Fertilizers case(cited supra), the apex court was concerned with landing charges from ship to port and not from one vessel to another through third vessel (or floating crane as in this case ) and held that unloading charges could not be added if the charges were already taken on notional basis.( para 3 to 9 of the decision refers). Our view of place of landing for loading and unloading being landmass of port though contrary to the reliance placed by the appellant on Reliance Industries case as reported in 2004(174) E.L.T. 344(T-Mumbai), gets strengthened by the decision of the same coordinate bench of Tribunal- Mumbai, as reported in Tribunal-2004 (174) E.L.T. 379 (Tri. - Mumbai) in the matter of Essar Oil Limited vs. Commissioner of Customs Ahmedabad. 17 In which, while disagreeing wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... UOI - 1999 (113) E.L.T. 358 (S.C.) The import of goods into India would commence when the same cross into the territorial waters but continue and is completed when the goods become part of the mass of goods within the country. These decisions were no doubt given in the context of inclusion of landing charges in the assessable value, but these are very relevant for interpreting the phrase 'place of importation' occurring in Section 14(l) of the Act as well as in Rule 9(2). We note that the Apex Court decision in Garden Silk Mills Ltd. (supra) is rendered by a 3 Judges Bench and hence is binding on all sub-ordinate Courts and Tribunals. Applying .the ratio of the said judgment the inevitable conclusion is that the place of importation is not the anchorage point where the ship anchors but the place of unloading on the landmass of India usually called a wharf or a jetty. We find that under Notification No. 3/98 (CCP), dated 26-4-1998, the Commissioner of Customs, Ahemdabad, as per provisions of the Customs Act, 1962, has approved the landing place for unloading imported goods and has also declared the area around such places to be customs area under Section 8(b) of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n transport charges on the one hand and unloading and handling charges on the other. While calculating the amount for charges under Rule 9(2)(b), the 1% has to take into account the f.o.b. value, transport cost and insurance cost as the basis. Obviously, the charges under Rule 9(2)(b) do not include the transport cost itself which comes under the purview of Rule 9(2)(a)". 8. We, therefore, hold that barge charges being part of the transport cost to the place of importation are includible in the assessable value. It would have been different if the c.i.f. price paid to the supplier had included this cost and the barge charges were incurred by the carrier and not by the importer. In such cases, the c.i.f. price would have been inclusive of barge charges and no further additions would have been required. In the present case, this was not so as the carrier carried the goods up to the anchorage only and the price paid to the supplier did not include the barge charges. 9. The appellants have referred interpretative notes to Rule 4 that the cost of transport after importation is not to be included in the value. Following the Apex Court decision in the case of Garden Silk Mills (supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the customs value be made dependent on such eventuality. Certain customs formalities relating to boat notes, transhipment etc. have been prescribed for facilitating safe landing of the goods in the notified customs area under customs control for subsequent clearance. Such procedural provisions cannot be interpreted to shift the place of importation to a point in sea against specific judicial pronouncement to the contrary. 12. In view of our findings above, we hold barging charges to be includible in assessable value. ................................. ". 18. However, we find that later in the matter of Ispat Industries Ltd Vs. CC, Mumbai as reported in -2006 (202) E.L.T. 561 (S.C), the Hon'ble Apex Court was concerned in appeal with the matter decided by tribunal of Ispat Industries as reported in 2001(135) E.L.T.646( T), with the following facts: "The facts of the case are that the appellant is a regular importer of iron ore pellets falling under Chapter Sub-heading No. 2601.12 of the Customs Tariff Act, 1975. The present appeal relates to 14 consignments of iron ore pellets imported between 14-2-1996 to 21-2-1998. In all these cases, the mother vessel coming from abroad and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Customs Act. Hence, unloading of the goods from the mother ship at the BFL was valid, since it was done in accordance with Sections 33 and 34 of the Customs Act. No doubt, the BFL had not been approved as proper place under Section 8(a), but it was a place where the mother ship could anchor. Hence, in our opinion, there is no illegality. 60. In the impugned order dated 7-3-2001 the Tribunal has based its decision on its conclusion that the place of import was the Dharamtar Jetty and not the BFL (vide paragraphs 9 to 18 of The Tribunal's order). Without commenting on the correctness or otherwise of this view, we are of the opinion that whether we treat the place of import as BFL or the Dharamtar jetty it will make no difference to the conclusion we have reached viz. that charges for transport of the goods by barges from BFL to Dharamtar jetty cannot be included in the valuation of the goods. 61. It is not disputed that the freight upto the Dharamtar jetty had been paid by the buyer. Hence we cannot agree that additional transportation charges being the charges for carrying the goods by barges from the mother ship to the Dharamtar Jetty have to be added to the valuation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Cargo to the barge and whether the goods were accompanied by a boat note under Section 35 of the Customs Act, 1962? c) Whether the mother vessel by which goods arrived could or could not anchor at the main port? d) Whether the Jetty at which goods were eventually discharged was included or not included in the bill of lading as port of discharge. e) Whether who paid the consideration (even if buyer) is relevant consideration or not or any emergent situation relating to draft of the ship as mentioned in para 60 and 61 (cited supra) of the Ispat Industries case of apex court. f) Whether the duty demand was raised consequent upon finalization of provision assessments, if same were involved? 20. We find that elaborate discussions, on all these points is not coming forth in the impugned order, as well as in the order of adjudicating authority. We, therefore, remand the matter and direct adjudicating authority to consider all these aspects including others on point of rate/transportation cost that may be raised by the litigant parties, to arrive at its decision, affording full opportunity to the appellants. 21. Matter is, therefore, remanded to the original authority to giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude- (a) the cost of transport of the imported goods to the place of importation. (b) loading, unloading and handling charges associated with the delivery ofthe 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 (iii) where the cost referred to in clause (c) is not ascertainable, such cost shall be 1.125% of free on board value of the goods; Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods: Provided also that where the free on board value is not ascertainable, the costs referred to in clause (a) shall be twenty per cent of the free on board value of the goods plus cost of insurance for clause (1) above and the cost referred to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 read as under: "10(2) For the purposes of sub-section (1) 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, and shall include - (a) the cost of transport, loading, unloading and handling charges associated with the delivery of the imported goods to the place of importation; (b) the cost of insurance to the place of importation: Provided that where the cost referred to in clause (a) is not ascertainable, such cost shall be twenty per cent of the free on board value of the goods: Provided further that where the free on board value of the goods is not ascertainable but the sum of free on board value of the goods and the cost referred to in clause (b) is ascertainable, the cost referred to in clause (a) shall be twenty per cent of such sum: Provided also that where the cost referred to in clause (b) is not ascertainable, such cost shall be 1.125% of free on board value of the goods: Provided also that where the free on board value of the goods is not ascertainable but the sum of free on board value of the goods and the cost referred to in clause (a) is ascertainable, the cost refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l trade at the time of its import. 15. The view we are taking in this case is in accordance with the three-Judge Bench decision of this Court in M/s. Rajkumar Knitting Mills (P) Ltd. vs. Collector of Customs, Bombay AIR 1998 SC, 2602. In para 7 of the said decision, it was observed thus: "The words "ordinarily sold or offered for sale" do not refer to the contract between the supplier and the importer, but to the prevailing price in the market on the date of importation or exportation" 16. The above decision thus clearly held that it is not the actual price mentioned in the contract between the supplier and the importer which has to be seen, but the prevailing price in themarket has to be seen. This again lends support to the view we are taking that Section 14 is a deeming provision and we have not to take specific cases for determining the value of the imported goods unless the same is in accordance with Section 14 of the Act. 17. Hence, while determining the value of Section 14, we must never lose sight of the fact that Section 14(1) is a deeming provision which creates a legal fiction. ..... 21. Learned counsel for the respondent, no doubt, emphasized on Rule 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h a case, Rules 5 & 6 have to be resorted to and the actual price has not to be seen. Thus, the Rules have been created to serve the object of Section 14 which was to determine a deeming price and not the actual price of the imported goods. 26. In our opinion if there are two possible interpretations of a rule, one which subserves the object of a provision in the parent statute and the other which does not, we have to adopt the former, because adopting the latter will make the rule ultra virus the Act. ........ 58. In the present case, the vessel had been anchored and permission by the proper officer under Section 47 after examination of the cargo had been granted after due payment, and goods were allowed to be water-borne through a Boat Note under Section 35. 59. The goods were unloaded from the mother ship on to the barge at BFL which, do doubt, had not been approved as the landing place under Section 8 of the Act. However, Section 33 permits unloading at a place other than that approved under Section 8 with the permission of the proper officer, and there is no doubt that permission had been obtained under Section 33 under the supervision of the proper officer under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as incorporated in the Customs Act. A Major change in Section 14 was inclusion of the first proviso to Section 14 to specifically include in the value the cost of transportation of goods. The Customs Valuation (Determination of Value of Imported Goods), Rules 2007 were also superseded by custom Valuation (Determination of Value of Imported Goods) Rules, 2007. The new rules also mandated inclusion of cost of transportation in the assessable value. 27. I find that Hon'ble Apex Court has clearly held that prior to 2007 there is a conflict between the valuation Rules, 1988 and Section 14 of the Act, Hon'ble Apex Court observed as follows in the case of Ispat Industries (supra): 24. If we read Rule 9(2) of the Rules independently without considering it along with Section 14 of the Act, then of course the submission of the learned counsel for the Revenue could be sustained. However, in our opinion, Rule 9(2) has to be read along with Section 14 and it cannot be read independently. As already stated above, Section 14 creates a legal fiction and we have to see the ordinary value of the imported goods in the course of international trade at the place and time of import. This means that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch specific transaction, but the ordinary value which it would have in the course of international trade at the time of its import. 16. The above decision thus clearly held that it is not the actual price mentioned in the contract between the supplier and the importer which has to be seen, but the prevailing price in the market has to be seen. This again lends support to the view we are taking that Section 14 is a deeming provision and we have not to take specific cases for determining the value of the imported goods unless the same is in accordance with Section 14 of the Act. Thus, also changed with discard of the deemed value concept in favour of Actual transaction value. 29. The Hon'ble Apex Court has also held that the transportation by barge is also part of transportation of goods, which reads as follows: 23. On first impression the submission of learned counsel for the Revenue appears to be sound, because surely the transportation by barge is also part of the transportation of the goods. However, on a deeper analysis, we are of the opinion that the submission of the learned counsel of the Revenue is clearly untenable. Admittedly, all the contracts entered into with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction value of goods and specific inclusion of cost of transportation was made in the Assessable value by virtue of first proviso to Section 14(1), the ratio of the decision of the Hon'ble Apex Court cannot be applied to present case. It is noticed that Hon'ble Apex Court in the case of Ispat Industries (supra) has clearly observed that transportation by barge which occurs prior to movement of barge is also part of transportation of goods(para 23 of the order by Hon'ble Apex Court in case of Ispat Industries). In this background, it cannot be said that the activity of loading the barge is not part of transportation. The appellants too have included barge charges for movement of goods of after unloading from mother ship in assessable valuation cost of transportation. 31. Moreover, in para 26 of the order of Hon'ble Apex Court in case of Ispat Industries (supra), has stated that if there are two possible interpretations of the rule, the one that subseries the object of the parent provision and the other does not, we have to adopt the former, because adopting later will make the rule ultra-virusto the Act. In 2007, after new Section 14 of Customs Act was introduced based on actual tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mother ship to barge are part of cost of transportation and includible in assessable value post 2007 under new Section 14 based on actual transaction value and therefore appeals are to be dismissed." 2. The matter was taken up for hearing today in the presence of both the sides. 3. I find that it would be important to reproduce the individual decisions of Member (Judicial) and Member (Technical) which are extracted below: Hon'ble Member (Judicial) "19. Guided by the above decision, we find that shifting charges in the anchorage cannot be strictly considered as unloading/ loading charges at the port in view of statutory provisions and case law discussed The question as to whether any further addition to CIF value for transportation charges is warranted or not, needs elaborate discussions and findings on various aspects and some of these, inter alia, are as follows:- a) Whether the goods at any stage prior to their landing at the final port destination were cleared for home consumption or not? b) Whether a permission by the proper officer had been given under Section 33 and 34 for moving the Cargo to the barge and whether the goods were accompanied by a boat note under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule, the one that subseries the object of the parent provision and the other does not, we have to adopt the former, because adopting later will make the rule ultra-virusto the Act. In 2007, after new Section 14 of Customs Act was introduced based on actual transaction value as cost of transportation was specifically made includible in the value in Section 14 of Customs Act, 1962. Any interpretation that excludes cost of transportation, including Loading/Unloading charges from mother ship would be ultra-virus to Section 14. 32. All the case laws relied by the appellant are for period prior to 2007 and therefore not applicable in view of changes in Section 14 of the Customs Act. In view of above the Loading/ Unloading charges incurred during movement of Cargo from mother ship to barges for further movement of cargo to jetty is includable as cost of transportation. 33. The appeals therefore deserves to be dismissed." 4. The Learned Advocate appearing on behalf of the appellant submits that the Hon'ble Member (Technical) has pointed out about the changes made in Section 14 subsequent to 2007 by way of amendment effective from 10th October, 2007, and has also emphasised on pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s his findings that in view of the amended Section 14, the Floating Crane Charges are required to be treated as transportation cost requiring the appellant to include the same for arriving at the Assessable Value. Therefore, he submits that the matter may not be remanded as has held by the Hon'ble Member (Judicial), but the appeal may be dismissed as held by Hon'ble Member (Technical). 6. Heard both sides and pursued the oral and written submissions made before me by both the sides. 7. The main issue to be decided in this case is as to whether the Floating Crane Charges incurred by the appellant toward unloading of the coal, is required to be added as fright/transportation cost to the assessable value for paying the Customs Duty. In case if it is held that these charges are on account of fright/transportation, then Assessable Value is required to be arrived at after adding such charges as has been canvassed by the Revenue and as held by Member (Technical) 7.1 On the other hand, if as the appellant submits that these charges have been incurred purely on account of the unloading of the cargo by using the floating crane, which cannot be equated to transportation/fright cost, such c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I find that the Hon'ble Member (Judicial) has gone into the case law of Ispat Industries (cited supra) and has held that its applicability or otherwise to the present case would be subject to conducting various factual checks as has been listed by him in para 19 (a) to (f) of the Interim Order. At para 19 (f) he has also considered the point of finalization of provisional assessment raised by the appellant and has directed this to be verified. 7.5 On the other hand, the Hon'ble Member (Technical) has gone by the amended provisions of Section 14 w.e.f 10th October 2007 to come to a conclusion that there is no need to verify any factual details. As per him the proviso to Section 14 (1) clarifies without doubt that the charges paid towards floating crane are required to be treated as transportation cost and hence are required to be added to arrive at the assessable value. I find that he has not given any finding on the stand taken by the appellant towards provisional assessment not been finalized and the demand was directly raised under Section 28 of Customs Act, 1962. However, as noted above the Hon'ble Member (Judicial) has considered this point and as has directed this fact also t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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