TMI Blog2000 (11) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... artmental authority, appeals have been filed before this Tribunal. The appellants thereupon approached Committee of Secretaries for clearance, in terms of the decision rendered by the Supreme Court in Oil and Natural Gas Commission v. Collector of Central Excise - 1992 (61) E.L.T. 3 (S.C.) as clarified by the decision reported in 1994 (70) E.L.T. 45 (S.C.). Committee on Disputes, which met on 17-8-2000, permitted Indian Oil Corporation Ltd. to pursue the appeal before this Tribunal stating : "The Committee, having regard to the facts that the dispute involved mixed questions of law and fact and the amount involved was substantial, permitted Indian Oil Corporation Ltd. to pursue the appeal in CEGAT." According to the minutes of the Committee, the issue regarding the includibility of the cost of demurrage charges and the related bank charges in determining the transaction value under Section 14 of the Act involved mixed questions of law and fact and so the matter has to be dealt with by the Tribunal and that the Committee cannot resolve the said issue. In this view, even though the Committee is ceased of the application seeking approval for pursuing the matter before the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the impugned was passed on 30-3-2000. By that order, the Commissioner came to the conclusion that demurrage charges and banking charges (paid on remittance of said demurrage charges) are includible in the assessable value of the goods imported. In this view, he confirmed the demand of Rs. 975,98,31,199.00 under Section 28(2) of the Act. Mandatory penalty of an identical sum was also imposed on Indian Oil Corporation Ltd. under Section 114A of the Act. 5.The period with which show cause notice dated 8-3-2000 and the final order was concerned was from January, 1995 to 30th June, 2000. 6.Government of India, Ministry of Finance (Department of Revenue) issued Customs Circular F. No. 467/21/89-Cus. V dated 14-8-1991. The said circular issued by the Central Board of Excise and Customs was in relation to demurrage charges and despatch money. According to this circular, these moneys are in the nature of penalties or rewards by virtue of a contracted charterer agreement between the carrier and the charterer and it can in no way be conceived as part of the freight or for that matter part of the price actually paid or payable for the goods. Accordingly, the circular declared that demurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the purposes of excise duty. It does not lie in the mouth of the Revenue to repudiate a circular issued by the Board on the basis that it is inconsistent with a statutory provision. Consistency and discipline are of far greater importance than the winning or losing of court proceedings." Later in Collector of Central Excise, Patna v. Usha Martin Industries [1997 (94) E.L.T. 460 (S.C.) = (1997) 7 SCC 47], the apex Court, after referring to the previous decisions, observed : "Through a catena of decisions this Court has pronounced that the Revenue cannot be permitted to take a stand contrary to the instructions issued by the Board. It is a different matter that an assessee can contest the validity or legality of a departmental instruction. But that right cannot be conceded to the department, more so when others have acted according to such instructions.................................................................... Of course the appellate authority is also not bound by the interpretation given by the Board but the assessing officer cannot take a view contrary to the Board's interpretation." In view of these authoritative pronouncements of the Apex Court, learned Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how the value is to be computed. As stated by their Lordships in Garden Silk Mills Ltd. case. Section 14(1)(a) contains the following principles of valuation: (a) the price is a deemed price; (b) at which such or like goods are ordinarily sold or offered for sale; (c) for delivery at the time and the place of importation or exportation; (d) in the course of international trade; (e) where the seller and the buyer have no interest in the business of each other; (f) the price is the sole consideration for the sale or offer for sale. According to the learned Senior counsel representing the Revenue, on the above analysis, their Lordships came to the conclusion that the entire costs paid or payable by the buyer till the time when the goods cross the Customs barrier should constitute the assessable value. Demurrage is an amount payable by the buyer for getting the imported goods out of the Customs barrier. So, the circular of the Board must be treated as contrary to the law laid down by the Supreme Court. 11.The issue dealt with by their Lordships in Garden Silk Mills Ltd. case was whether the Customs authorities can add or includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs barrier must form part of the value. That cost should necessarily take within it demurrage as well. Therefore, according to counsel, the Garden Silk Mills Ltd. case is authority for the proposition mat the entire cost incurred for bringing the imported goods up to the Customs barrier should form the assessable value. We find it difficult to agree with this argument. First of all the apex Court was not concerned with the demurrage paid or payable by the importer on account of the delayed clearance of the goods from the ship. Demurrage becomes payable only on extraordinary situations. The provisions contained in the Rules were not adverted to by the Apex Court in the said decision. Their Lordships have categorically held that the price at which the imported goods are ordinarily sold should be the basis for valuation under Section 14(1) of the Act. Ordinarily demurrage is not payable. Only in extraordinary circumstances where delay in discharging the goods from the ship occurs, demurrage becomes payable. Such extraordinary circumstances are not falling within the purview of Section 14(1) of the Act. This aspect can be illustrated by the following example :- In a situation wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agree with this distinction sought to he made by the Bench in Panchmahal Steel Ltd. case. Demurrage is paid on account of the delay in clearing the goods from the vessel. That cannot form part of the value of the goods. Further, since the two-Member Bench which decided the Panchmahal Steel Ltd. case was not apprised of the existence of the circular issued by the Board, the said decision cannot be said to be one correctly decided. 15.Rule 4 of the Rules states that the transaction value of imported goods shall be the price actually paid or payable for the goods adjusted in accordance with the provisions contained in Rule 9. Clauses (1) to (3) of Rule 9 provide for various items of cost that can be included to the price actually paid or payable in finding out the assessable value. All these additions must be to find out the price of the goods in ordinary circumstances. Expenditure incurred by parties in extraordinary situations cannot go in to enhance the assessable value. Demurrage is an expenditure which arises in extraordinary situations. Such an expenditure is not in the contemplation of the legislature when it enacted the Sections or the Rules. Further, Rule 9(4) mandates that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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