(A.K. Sikri and Rohinton Fali Nariman, JJ.)
Commissioner of Central Excise, Mangalore ______________ Appellant
v.
Mangalore Refinery and Petrochemicals Limited _________ Respondent
Civil Appeals Nos. 2691-2728 of 2009† with No. 1454 of 2011†, decided on August 27, 2015
The Order of the Court was delivered by
A.K. Sikri, J.:—
1. The short issue which is involved in these appeals is as to whether ship demurrage charges paid by the respondent/importer (hereinafter referred to as “the assessee”) on the import of the goods are to be included in the assessable value of the goods imported for customs duty purposes. In order to decide this issue, facts can be taken from Civil Appeals Nos. 2691-728 of 2009.
2. The assessee in these appeals is M/s. Mangalore Refinery and Petrochemicals Ltd. It had imported 94204.425 MTs (ullage quantity measurement of vessel) of crude oil vide Bill of Entry No. 0924, dated 23-5-2001 and warehoused the same into their shore tanks. The same was cleared under provisional assessment by executing PD Bond, pending production of original documents by the assessee and reply to further queries by the Department. The provisional assessment was taken up for finalisation based on this Court’s decision which upheld1 the order passed by CEGAT in Hindustan Petroleum Corpn. Ltd.2 and National Organic Chemical Industries Ltd.3, wherein it was held that customs duty should be levied on the quantity that is pumped into the shore tanks in terms of Board’s Circular No. 96/2002, dated 27-12-2002. The shore tank quantity of crude oil is considered as the relevant quantity for the purpose of assessment. On scrutiny of the documents filed by the assessee, it was found that bill of lading quantity was taken as the cost and freight (FOB) component of the relevant value for assessment as per Section 14 of the Customs Act, 1962. Therefore, irrespective of the fact whether there is shortage in the quantity received compared with the bill of lading quantity or not, the importer has to pay the duty on transaction value i.e. the full value paid for the bill of lading quantity. On that basis, the Customs Authorities took the view that the declared shore tank quantity is to be corrected, which worked out to 93756.154 MTs.
3. We are not concerned with this aspect in the present appeals. That issue has been raised in other batch of appeals, which we have heard today and judgment is reserved.
4. Insofar as issue involved in these appeals is concerned, we may point out that during this period the goods could not be cleared and it was observed that the assessee had paid demurrage charges of Rs. 6,48,094.93 among other fees/charges. As per the appellant Revenue, these demurrage charges were also to be included in the assessable value for the purpose of levy of duty of customs. Show-cause notice dated 9-6-2003 was issued in this behalf, which resulted in passing of order dated 7-3-2005 confirming the demand raised in the show-cause notice. The assessee filed appeal against the order of the adjudicating authority before the Commissioner of Customs (Appeals), which was however dismissed. The assessee, thereafter, approached the Customs, Excise and Service Tax Appellate Tribunal (for short “CESTAT”) and CESTAT has passed order dated 6-2-20064 holding that the assessee should discharge duty liability on the transaction value, which is actually the amount paid on the bill of lading quantity. However, insofar as demurrage is concerned, it has held that the same is includible in the transaction value. In forming this opinion, the Tribunal relied upon its earlier order in the case of this very assessee, which is reported as Mangalore Refinery and Petrochemicals Ltd. v. CCE5.
5. We have heard the counsel for the parties at length. It is not even necessary to go into the various nuances of the matter as we are of the opinion that these appeals are bound to fail on one simple ground. The demurrage charges are admittedly incurred after the goods reached at Indian ports and, therefore, it is a post-importation event. Such charges, therefore, cannot form part of the transaction value. Issue in this behalf is settled by this very Bench in Commr. of Customs v. Essar Steel Ltd.6
6. Following the aforesaid judgment, these appeals fail and are, accordingly, dismissed.
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† On appeal from (2009) 233 ELT 528 (Tri)
† On appeal from Final Order No. 299 of 2010 dated 20-1-2010 by CESTAT, Bangalore
1 Commr. of Customs v. National Organic Chemical Industries Ltd., (2005) 10 SCC 277
2 Commr. of Customs v. Hindustan Petroleum Corpn. Ltd., (2000) 121 ELT 109 (Tri)
3 National Organic Chemical Industries Ltd. v. Commr. of Customs, (2000) 126 ELT 1072 (Tri)
4 Mangalore Refinery & Petrochemicals Ltd. v. Commr. of Customs, (2006) 205 ELT 753 (Tri)
5 Mangalore Refinery and Petrochemicals Ltd. v. CCE, (2002) 141 ELT 247 (Tri)
6 Commr. of Customs v. Essar Steel Ltd., (2015) 8 SCC 175 : (2015) 319 ELT 202
