TMI Blog2004 (5) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... oader System and Conveyor Belt System installed with the help of CBU, and other instruments the cargo in the barges is loaded on to the convey belt system which moves the cargo from the jetty to the factory of the appellant to storage areas situated about 2 to 33 KMs away from the jetty. When the cargo is unloaded from the "mother vessel" on to the barges, the pay loaders/uniloaders belonging to the appellants are used in the hatches of the 'foreign mother vessel' to bring the cargo from the corners of the hatch to the centre of the hatch, under its mouth, to facilitate the Floating crane to lift the cargo from the hatches and discharge the same into the Barges. The cleaning of hatches is also done by these Payloaders/Uniloaders. The Barges/Floating Crane are required to be moored/unmoored, manually by the seamen, to and from the 'foreign mother vessel' at the anchorage for effective discharge of cargo, from the foreign 'mother vessel' on to the barges. The barges containing the imported cargo have to traverse about 16 to 20 nautical miles to bring the imported cargo at Vikram Jetty, a declared place of landing, for unloading/loading of import cargo under the Customs Act, 1962. Fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses were taken at the rate of Rs. 96.38 per metric tonne, as the expenses incurred by another importer, M/s. Ispat Industries Ltd., Dharamtar inasmuch as it was felt that the circumstances of the barge lighterages of the present importer and that in the case of M/s. Ispat Industries Ltd. was similar. As the importer had failed to make available total expenses incurred on the Floating crane as well as failed to produce relevant documents to facilitate the working of actual expenses incurred on the use of Floating crane for transhipment of imported cargo to the barges, in spite of several letters/reminders, the expenses on Floating crane on the basis of notional hire cost/repair and maintenance expenses/overheads/bunker cost and profit margine taken to reckon the demand made. 3.The lower authority after considering the reply and hearing the importers found : (a) since the mother vessel is anchoraged 16 to 20 nautical miles away from Revdanda port, a declared port under of the Customs Act, 1962, there was no option to the importer but to tranship the cargo on to barges and bring the same to the Vikram Jetty at Revdanda Port. The barges, go alongside the mother vessel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the land mass and not otherwise. Therefore the definition clause was required to be abandoned and the word was required to be understood in common parlance. It was concluded that importation goods is an integrated process which culminates when the goods are landed on the landmass of India so that they can be introduced in the stream of supplies to form a part of the mass of goods within the country. Therefore it was concluded that the place of importation in this case for the purpose of Section 14 is nothing but the Vikram Jetty at Revdanda port a declared port. (f) He differentiated the case of Apar Pvt. Ltd. of the Bombay High Court [1991 (51) E.L.T. 224 (Bom.)] and found that the facts and circumstances in the present issue were different and relying upon the case of Shriram Fibres Ltd. v. Union of India, 1994 (69) E.L.T. 4 (Madras), Barium Chemicals Ltd. v. Union of India, 1988 (37) E.L.T. 327 (A.P.) and Govind Ram Aggarwal v. Collector of Customs, 1988 (35) E.L.T. 280 (Cal.) holding that landing charges have to be included in the assessable value for the reason that they are incurred for bringing the goods form the ship to the port and the place of importation mean l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oating crane and fuel cost were not included while computing operational cost and since the importer had failed to give complete and total expenses incurred and considering the floating crane capacity, he found that he had no option to adhere to the theoretical method for inclusion of expenses. (j) As regards the comparison of the activity with that of M/s. Ispat Industries Ltd., as proposed in the Show Cause Notice to determine the barge expenses, he found that since the importer had failed to provide the relevant documents and the Chartered Accountant's Certificate did not reveal the total and correct expenses, and the fact that the circumstances in the operations of 'Barge lighterage' of the importer and that of M/s. Ispat Industries Ltd. was similar, the expenses incurred on such activities are comparable, the expenses of M/s. Ispat Industries Ltd. and barge lighterages calculated on the basis of actual expenses could be made applicable in the importer's case and therefore he confirmed the demand of Rs. 5,86,92,636/- under Section 28 of the Customs Act, 1962. 4.In appeal, the Commissioner (Appeals) upheld the order of the Assistant Commissioner. Hence this appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the "Pass" was otherwise eligible for such a "pass". Similarly, the proper officer acting under Section 47 does not adjudicate. He merely sees as to whether all the prescribed formalities have been duly completed and allows the goods to go out of Customs charge if he is satisfied in this respect...". Thus this place and point of time of order under Section 47(1) would constitute 'Crossing the Customs barrier". Once the goods clear such Customs Barrier, costs incurred thereafter, by a "pass" holder, cannot be added by any stretch of imagination to be costs to go to add to compute the value being incurred up to the crossing of 'Customs Barrier' for Custom duty computation. The lower authorities have held and proceeded to add all such costs to be added for computation as up to delivery, that in fact and in view of the delivery being effected onboard the mother vessel cannot be upheld. (d) The lower authorities have come to a finding, as it appears from the order, by use of the words "transhipped/transported in the barges" that the imported goods were 'transhipped'. Examining this aspect, it is found, Section 32 of the Customs Act, 1962 stipulates that no imported goods, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld. Since Boat Notes used in this case are found to be in Form II issued under Boat Notes Regulation 4(ii), whereas Boat Notes for Transhipment of cargo are issued under different provision of Regulation 4(iii). 'Transhipment' of goods is governed by Goods Imported (Condition of Transport) Regulations 1995, issued by the Central Board of Excise Customs under the provisions of Section 158 of the Customs Act, 1962. These regulations provide for 'Transport' of imported goods by another vessel or by a different mode of transport i.e. Road, Sea, Air as the case may be, of imported goods brought by a vessel and mentioned separately as such in the Import General Manifest as for 'transhipment' to another Port/Custom Station and allowed by Proper Officer on separate requests made on execution of a Bond. The elaborate 'duty free clearance' of 'transhipped goods,' as provided for by these Regulations will have to be complied to constitute 'transhipment' of goods. No bill of transhipment under Section 54 of the Customs Act, 1962 as required by law or the goods to have been cleared without duty have been found to be existing. The provisions of law have not been followed/complied, nor a cogni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision, since confirmed by the Supreme Court, 2004 (165) E.L.T. 257 (S.C.), as all extraordinary costs of transport, incurred, to bring and land the goods ashore, due to the peculiar situation at a port cannot be added. After noting the provisions of the Customs Act, 1962 definition as per Section 2(23) for Import, 2(24) Import Manifest, 2(27) India, 2(28) Indian Customs Waters and the provision of Section 30 of the Customs Act, in the case of Union of India v. Mustafa Najibai Trading Co., 1998 (101) E.L.T. 529 (S.C.), after observing that Outer Anchorage, was part of Bombay Port held as follows : "25 ……In view of Section 30(1) of the Act the Import General Manifest should have been delivered within twenty four hours of the arrival of the vessel at the outer Anchorage. The High Court was in error in holding that the vessel would be treated to have arrived at the Customs Port of Bombay on August 23, 1983 after the Bombay Port Trust charges had been paid and the signal had been given for the vessel to be brought into the inner anchorage on or after August 23, 1983....". It has therefore to be held in this case that, when a vessel is proved to be on a date at the designated 'Anc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of cargo by water and or on land. It cannot be equated to transport of cargo, to the port of importation. The word 'transport' especially 'trans' in the New Shorter Oxford English Dictionary is defined to mean as a prefix in English language in the sense of 'across beyond in or other side' and the word 'transport' is defined to mean "move or carry from one place or person to another convey across." Therefore, the term 'costs of transport of the imported goods to the place of importation' as used in Rule 9(2)(a) of the Valuation Rules would be limited to movement of cargo involving change of place from a Foreign port up to the door steps of the Indian Customs Station/Port, which would be 'outer anchorage'. All costs incurred thereafter, if any, would not be costs under Rule 9(2)(a) but would be costs covered by the terms of Rule 9(2)(b) of Valuation Rules, which uses the words - "Loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation." The coverage of costs thereunder is vast, it would cover all kinds of costs being incurred ex-Anchorage to bring and unload, load the cargo in to the conveyor system at Vikram jett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready added 1% towards these charges on to value and paid duty on the same, then following the very same decision of Corromondal Fertilisers Ltd., no further amounts can be ordered to be added on to the value under Section 14 of the Customs Act, 1962 and duty demands made thereafter. (h) Stevedoring charges, as in this case, have been held and accepted as loading/unloading charges by the CBEC pursuant to judgment of Corromondal Fertilisers (supra) vide M.F. C.A (DR) Circular No 80/2002, dated 29th November, 2002 at para 4 stipulated : In"4. view of the above, it has been decided not to include the stevedoring charges, in the assessable value of the imported goods, as they are adequately covered by the one per cent of F.O.B. value levied towards loading/unloading and handling charges under Rule 9(2)(b) of the Customs Valuation Rules, 1988." In this view and the binding nature of CBEC views circulated, D.R.'s pleading to hold them to be inclusive as 'transport' or for addition for deciding the value of imported goods cannot be heard and or upheld. (i) he order of this Tribunal in the case of Ispat Industries Ltd., 2001 (135) E.L.T. 646 (T) = 2001 (45) RLT 850 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of that decision, applied Rule 9(2)(a) to include the charges impugned therein, which was not the issue, as found and admitted by them to be before them or was the case of department in the notice in that case. (v) Did not consider the provision of Sections 33 and 35 of the Customs Act, 1962 have not been considered. (vi) did not consider Rule 9(2)(b). (j) The Tribunal in the case of M/s. Essar Steels Ltd. others vide Order No. CI/844 to 53/WZB/2003 [2003 (156) E.L.T. 42 (T)] wherein the issue of amount of freight costs of a time charter, the amount paid is a rent and in the facts of that case, the freight already added at 20% of FOB or as per actual freight was the entirety of the freight which could be added to the assessable value. Therein the Hon'ble Member (T) took a view that what is added to value is the cost of transport of the imported goods and not the actual cost incurred by the carried. In other words, what is addable is only the normal cost of transport. This decision does not dilute the proposition that ordinary cost of transport to the place of importation could be only added and no further addition are called for. It is also found that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the aforesaid, it is clear that where the transaction value is negotiated price between the buyer and the seller, to include freight elements up to the destination stipulated in the contracts, nothing further is required to be added, when the destination is the port of import. In other words, transaction value has to be at the doorsteps of the stipulated port of destination. Therefore, additions are required to be made of transport cost up to the destination port doorsteps only under Rule 9(2)(a) and thereafter all costs incurred to bring the goods laden onboard a vessel, to be brought to land on terafirma at the appointed point of landing would be charges under Rule 9(2)(b). (l) The activity undertaken in respect of imported goods viz. taking them from onboard the mother vessel to the appointed place (Vikram jetty in this case) by barges would be an activity covered under the term 'unloading, loading and handling charges' is supported from the authoritative commentary on Customs Valuation by Saul Sharman and Hendrich Glash in respect of Article 8.2(b) of the Agreement of Implementation of the GATT Valuation Code on which Rule 9(2)(b) is based and corresponds to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver and above the 1% which already stands added to determine the assessable value under Section 14 of the Customs Act, 1962 read with Valuation Rules, after the substitution with effect from 5-7-1990. In this view of the finding, it is not necessary to go into the challenge of computation of each charge pleaded by the appellants. (n) The contention of the ld. DR for Revenue and the finding of the lower authority that barge charges and other charges incurred in situation where the mother vessel cannot navigate up to the declared place of unloading or does not navigate, requiring a smaller vessel (barge/lighter) to take the goods from the mother vessels position to the identified stipulated place the activity is a continuation of the cost of transportation incurred by the importer and not reimbursed by the supplier nor claimed from the supplier, when place of unloading at the jetty is declared and then since Section 14(1)(a) and (b) of the Customs Act, 1962 provide determination with reference to place of importation, which would be the designated jetty at the port it should cease all such costs have to be added, following the settled law in - (i) Prabhat Cotton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f imported goods prior to 1988. There is no conflict with the additions of 'landing charges'. There can be no dispute that after 1988 as per Rule 9 (4) of Valuation Rules, the charges prescribed under Rule 9(2)(a), (b) and (c) could only be added, which include 'landing charge costs.' At para 16, Garden Silk Mills Ltd.'s judgment provides - "It would appear to us that the import of goods into India would commence when the same cross into the territorial waters and continues and is completed when the goods became part of the mass of goods within the country; the taxable extent being reached at the time when the goods reach the Customs barriers and the bill of entry for home consumption is filed." i.e. the point at which import commences and where the taxable extent occurs and thereafter since the activity is ongoing expenses relating to activities associated with bringing goods to land are held to be included in the assessable value. This discussion cannot be stretched to interpret the landing place at the jetty to be the only place to be regarded as the place of importation, as conclusions, which have been arrived at by the lower authorities and pleaded by the ld. DR. The judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause applicable on transport, within the same port area, as in this case. If the barge/lighter is traversing from a different Custom in India Port to the Port of actual import in India, then the law as laid in the Indian Oil Corporation Ltd.'s case [2003 (161) E.L.T. 375 (T) = 2003 (54) RLT 926 (CEGAT) would apply. It cannot apply to add barge charges as transport charges, when such charges are for movements within the same port and no transhipment is involved. (p) When Import General Manifest of foreign mother vessels have been accepted by the proper officer and entry inwards is granted, then the date of entry inward would be the date of the final noting for the advance Bills of Entry and the goods would be accepted to have been imported on that date at that port by the vessel declared in the Bill of Entry. In this case, such a vessel is the mother vessel. Therefore, there is no transhipment for foreign mother vessel to the barge. 4.In view of the findings arrived herein, it is to be held - (a) The charges incurred, subsequent in time to and place to an order passed under the provisions of Section 47 of the Customs Act, 1962 cannot be added to value under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the unloading/discharge directly into the barges. The operations can commence only after filing of the Bills of Entries in the Bombay Customs and after payment of Customs duty. The Customs Officer shall inspect the cargo on board the vessel. Thereafter, shall give pass out of customs charge. Only after completion of these formalities, the imported material shall be discharged from the mother vessel into the smaller barges. On completion of discharge of the cargo, you shall also forward the village report to this Custom House within 15 days from the date of sailing of the vessel." (iii) Appeal No. C/580/02-Mum. filed by M/s. Sandoz Textile and Appeal No. C/582/02-Mum. filed by M/s. Lavanya Holding Trading Pvt. Ltd. are allowed, in view of the findings hereinabove since the costs thereof incurred are within the Port of Magdalla (Gujarat). (iv) In Appeal No. C/380/02 of M/s. Reliance Industries Ltd., admitedly it is found, it was the submission made during the hearings, that the goods therein have been cleared on IGM and the Entry Inwards is accepted for the Mother vessel by the Magdalla Customs and accordingly Bills of Entry were filed, though the barging/lighterage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be set aside and the matter remitted back for redetermination, after hearing the parties. 6.Ordered accordingly. [Order per : Krishna Kumar, Member (J)]. -7. While agreeing with my learned brother, I consider it appropriate to add to enable the adjudicating authority to readjudicate the matter in respect of Appeals of Reliance Industries Ltd. and Essar Steel Ltd. :- (a) All cases where the mother vessel unloads the cargo at the anchorage of Magdalla Port (where the jetties are situated), the cost of barging operations would be clearly in the nature of loading, unloading and handling charges associated with the delivery of the imported goods for which a notional addition of 1% has already been made by the appellants themselves in the Bills of Entry and therefore no further addition on this account would be warranted. Since the impugned orders do not indicate the precise number of cases where the mother vessel discharged the cargo at the anchorage at Magdalla Port, the adjudicating authority will now first identify cases of this type and exclude such cases from consideration while working out the demand for differential duty in the remand proceedings. (b) T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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