TMI Blog2003 (3) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... , as the matter was once remanded back to the Commissioner (Appeals) by the Tribunal. The Tribunal while remanding the matter had inter alia observed that before coming to any conclusion, the contract entered into by the party will have to be looked into besides the modalities of the transaction. Since the issue to be decided in all these eight appeals and the facts and law involved are also same, these are taken up together for disposal according to law. 3. The brief facts of the case are that the importers had imported Kerosene oil and filed Bills of Entry. The goods were purchased from Indian Oil Corporation on high seas sale basis. The goods were assessed provisionally and were released on the basis of provisional invoice issued by Indian Oil Corporation. The importers produced final invoice for the consignment which included among other charges, demurrage charge, wharfage and Stock loss charge. In the assessable value the department took into consideration the value of the above charges also for the purpose of assessment. The importers contended that demurrage charges, wharfage charges and stock loss should not be added for the purpose of arriving at the assessable value ina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porters-respondents submitted that the different Commissioners (Appeals) have passed reasoned orders and he sought for upholding the same. He has also invited our attention to the judgment of the Larger Bench of the Tribunal in the case of Indian Oil Corporation Ltd. v. CC, Calcutta reported in 2000 (122) E.L.T. 615 wherein it was held that demurrage charges incurred by oil companies is not to be included in the assessable value of crude petroleum and other petroleum products since demurrage is not payable ordinarily. 7. We have carefully considered the rival submissions and gone through the case records and also perused the case law cited by the learned Counsel for the respondents MGM International. We note that in all these cases the issue that arising for consideration is whether demurrage, wharfage and on-shore stock loss can be included for arriving at the assessable value of the goods. We find that in the case of respondents MGM International, the lower appellate authority has set out the terms of the contract between the seller and the buyer (i.e. IOC and the importers-respondents) in the finding portion of his order. In terms of the contract, the final price shall consist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n situations where demurrage is not paid or becomes payable. The Bench further held that situation where demurrage is paid or becomes payable is not an ordinary situation. It was also held therein that costs incurred on such extraordinary situations cannot be taken into consideration for arriving at the assessable of the goods as demurrage is an expenditure which arises in extraordinary situations. In our opinion the cited judgment is distinguishable from the facts of the present case because that was a case where the importer i.e. Indian Oil Corporation imported goods viz. crude oil etc. from foreign country and there was no sale at high seas and the vessel entered the territorial waters of India and had to wait at the port for discharge of the cargo for various reasons such as detention of the vessel etc. and in such a situation, the demurrage and wharfage etc. became post importation charges and those situations cannot be termed as an ordinary situation but an extraordinary situation and it was in those extraordinary situation, it was held that the demurrage cannot form part of the assessable value. 8. In the present case, the price at which the goods were offered for sale at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the refrain in Rule 9(4) is very significant and due regard has to be given to it while seeking additions to the price actually paid. Inasmuch as there was no discussion in the order of Commissioner (Appeals), the Tribunal set aside the same and remanded the matter with directions to consider the relevant evidences and the documents including the contracts entered into by the respondents with M/s. IOC. 11. While passing the impugned order in de novo proceedings Commissioner (Appeals) has considered the terms and conditions of the contract between M/s. IOC and the respondents. As per the said contract the final price of the goods will consist of ocean loss, demurrage and bank charges. It was one of the clauses of the contract that the said loss cannot be quantified with certainty and the parties have determined this elements on certain basis. Similarly wharfage and incidental were to be as actuals. 12. The Commissioner (Appeals) has observed as under :- The Hon'ble Tribunal while remanding the case has pointed out that according to Rule 9(4), no addition shall be made to the price except as provided under Rule 9. Second process to Rule 9(2) states that loading, unloadin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lier three Member judgment of the Tribunal in the case of Deepak Fertilisers Petro-chemical Corporation Ltd. v. CC - 1989 (41) E.L.T. 550 (T) holding that wharfage and demurrage are not landing charges and are not to form part of the assessable value. The subsequent decision of the two Member in the case of Panchmahal Steel Ltd. - 1998 (101) E.L.T. 399 distinguishing the decision, in the case of Deepak Fertilisers on the ground that these charges were not paid to the port authorities, but were for detention of vessel and pre-landing stage charges and hence includible in assessable value, was held to be not a correct decision by the Larger Bench. The Larger Bench has observed that demurrage charge is an expense which arises in extraordinary situation and is not contemplation of the legislature when it enacted the sections or the rules. Such charge, in fact, is paid for account of the delay in discharging the goods from the vessel or from removing the same out of the port area. As per the provisions of Rule 9(4), no addition shall be made to the price actually paid or payable in determining the value of the ported goods except for as provided for in the rules. The demurrage, wharfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Rule 9(1) are those made to the foreign supplier by M/s. IOCL under the sale contract between them and not those made to the latter by the respondents under the High Seas Sale contract. This plea has been contested by ld. DR submitting that the two contracts are independent of each other and that only the terms of the ex-High Seas Sale of goods are relevant to its valuation for Customs duty assessment. In this connection, he has relied on the Supreme Court's decision in Hyderabad Industries Ltd. v. UOI [2000 (115) E.L.T. 593 (S.C.)] wherein purchases by MMTC (Canalising Agency) from foreign seller and subsequent sale (ex-High Seas) by it to Indian buyer were held to be independent of each other and service charges paid to MMTC by Indian buyer (importer) @ 3.5% of C F value of import was held to be includible in the assessable value of the imported goods. Ld. Advocate has, then, argued that, as the above charges were incurred "when the ownership over the goods was yet to pass from IOCL to the respondents", they were not to be included in the assessable value of the goods. He has, further, adopted the reasoning of the learned Member (Judicial) to exclude the above charges from a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all other payments actually made or to be made as a condition of sale of the imported goods by the buyer to the seller" were liable to be added to the price actually paid or payable for the said goods. Ex-High Seas sale of goods is not a new species of international trade and the same was in vogue when the Customs Valuation Rules were made. The Rules, however, did not treat imports under ex-High Seas sale contract differently from imports made otherwise. It can, therefore, be safely said that the Valuation Rules treated an ex-High Seas seller as foreign supplier and his buyer in India as importer of the goods. Such a sale of goods is deemed to take place beyond the Indian territorial waters. Therefore, as rightly submitted by ld. DR, only the terms of the High Seas Sale contract are relevant to the valuation of the goods for Customs purpose. Ld. DR is eminently supported by the Apex Court's judgment in Hyderabad Industries (supra) and the Tribunal's Larger Bench decision in Eternit Everest Ltd. v CC, Bombay [2000 (119) E.L.T. 716] cited by him. It is indisputable in the present case that the "High Seas" sale agreements between M/s. IOCL and the respondents had provided for payment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar dated 14-8-1991. The facts of the case considered by the Apex Court were similar to that examined by C.B.E. C. I have already distinguished the facts of the instant case from those of the case examined by the Board. It would follow that the decision of the Apex Court is not applicable to the instant case. It may, contextually, be noted here that the above Circular has been withdrawn. 17. Ld. advocate has submitted that the above charges were incurred when his client was yet to become owner of the goods and hence the charges were not includible in assessable value. Ownership is not the relevant factor for Customs Valuation and duty assessment purposes as is discernible from the definition of "importer" under Section 2 of the Customs Act. This apart, it is noticeable in this case that the advocate's claim that ownership of SKO was still with M/s. IOCL when the charges were incurred is contradictory to his own argument that M/s. IOCL were holding possession of the goods at the material time as a bailee only. An owner in possession of his goods cannot be a bailee of the goods vide Chapter IX of the Contract Act. Counsel's argument is therefore rejected. 18. For the reasons al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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