Custom, Excise & Service Tax Tribunal
M/S Ruchi Soya Industries Ltd vs Commissioner Of Customs (Import), ... on 7 January, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II Appeal No. C/88721 to 88745/13 (Arising out of Order-in-Appeal No. 66 to 90(AC/GR.I)/2009 dated 25.2.2009 passed by the Commissioner of Customs (Appeals), JNPT, Nhava Sheva). For approval and signature: Honble Shri Anil Choudhary, Member (Judicial) Honble Shri P.S. Pruthi, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Ruchi Soya Industries Ltd. Appellant Vs. Commissioner of Customs (Import), Nhava Sheva Respondent Appearance: Shri G.L. Rawal, Advocate for Appellant Shri Ahibaran, Addl. Commissioner (AR) for Respondent CORAM: SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) SHRI P.S. PRUTHI, MEMBER (TECHNICAL) Date of Hearing: 07.01.2015 Date of Decision: .2015 ORDER NO. Per: P.S. Pruthi
These appeals are directed against order of Commissioner (Appeals), who confirmed the rejection of refunds by the adjudicating authority.
2. The facts of the case are that the appellant, M/s Ruchi Soya Industries Ltd. and other group companies, filed applications for refund on the basis that in respect of their liquid cargo import, the shore tank quantity received is less than the Bill of Lading quantity. Therefore, the duty paid by them on the Bill of Lading quantity is in excess of duty actually payable on the actual quantity imported. The refund is claimed for the differential quantities which were not arrived/discharged. In other words, shore tank receipt quantity should have been taken into account for calculation of duty in terms of Boards Circular 96/2002 dated 27.12.2002 which was issued on the basis of Hon'ble Supreme Courts judgment in the case of Commissioner of Customs, Mumbai vs. NOCIL Ltd. 2002 (142) ELT A280 (SC). However, the refund claim was rejected on the ground that the Boards Circular was further amended vide Circular No. 6/2006-Cus dated 12.1.2006 according to which the assessment was to be done on the invoice price when duty is payable on ad valorem basis and was to be done on shore tank quantity received when duty is payable on specific rate basis.
3. Heard both sides.
4. The learned Counsel for the appellant contended that Board Circular 6/2006 dated 12.1.2006 is ultra vires as it goes against the ruling of the Hon'ble Supreme Court in the case of NOCIL (supra). In any case, he argued that, all their assessments were made well prior to the date of Circular 6/2006 and therefore, it cannot be applied in the present case. He also stated that the Circular would apply only in cases where duty is assessed on ad valorem basis. It does not apply where duty is assessed on the basis of Tariff value as is the case in respect of goods imported by them. He relied on judgment in the case of Commissioner of Customs, Vishakhapatnam Vs. Hindustan Petroleum Co. Ltd. 2001 (130) ELT 139 and the case of Mangalore Refinery & Petrochemicals Vs. Commissioner of Central Excise 2002 (141) ELT 247. According to him, Commissioner, Chennai had expressed a view in a letter that the Boards Circular will not apply to goods where tariff value is notified by the Govt. and adopted for levy of duty. And this letter of Commissioner being like a Trade Notice, the authorities are bound to follow this view. In support, he relied on the case of SAIL Vs. Commissioner of Customs 2000 (115) ELT 42 (SC). The learned Counsel further relied on the case of Commissioner of Customs, Vishakhapatnam Vs. Ruchi Infrastructure Ltd. 2008 (224) ELT 477 (Tri-Bang), which held that the issue of assessment on the basis of shore tank quantity is no longer res integra. He also relied on the case of General Foods Ltd. Vs. Commissioner of Customs, Jamnagar 2008 (232) ELT 750 (Tri-Ahmd) in which it was held that Tribunal decisions lay down the correct interpretation of law and cannot be ignored on the ground that there is a contrary Circular of the Board.
5. The learned AR reiterated the findings of the Commissioner.
6. We have considered the submissions of both sides. The facts are clear. The goods in the present case are subjected to tariff value which is to be adopted under Section 14(2) of the Customs Act for the purpose of assessment of duty. The dispute has arisen in this case because the quantity of liquid cargo dispatched at the time of export from the country of export as shown in the Bill of Lading submitted along with the Bill of Entry as well as the quantity shown in the Ships Ullage Survey Report, which is determined on the basis of survey carried out on Board Ship by an Independent Surveyor, are different from the quantity which was received in the shore tanks from the ship. Tribunal held in the case of NOCIL Vs. CC(I), Mumbai 2000 (126) ELT 1072 (Tri) that the duty cannot be charged on the basis of discharge certificate from the ship. It is the quantity received in shore tanks, which is to be considered for payment of import duty. This judgment of the Tribunal was affirmed by the Hon'ble Supreme Court in the case of NOCIL (supra). Thereafter Board, vide Circular No. 96/2002 dated 27.12.2002, issued a clarification to the effect that in the case of Bulk Liquid Cargo, whether for home consumption or for warehousing, the shore tank receipt quantity is to be considered for the levy of customs duty. We note that in the case of NOCIL, the goods were leviable to specific rate of duty. In 2006, Board amended Circular No. 96/2002 by Circular No. 6/2006 dated 12.1.2006. The necessity for amendment arose because a doubt had arisen in cases where customs duty is chargeable on ad valorem basis. Noting that in such cases there may not be any requirement for determination of the quantity of goods as the basis for levy of customs duty would be the transaction value, Board clarified that where customs duty is leviable on ad valorem basis, the assessment of Liquid Cargo should be based on invoice price which is the price paid or payable for imported goods i.e. transaction value irrespective of quantity of shore tank measurement. However, wherever the customs duty is levied at specific rate, the determination of quantity would be relevant for the levy of customs duty.
6.1 We have seen Board Circular 6/2006. We cannot agree with the appellants contention that the Circular clarifies that where the imported goods are subjected to tariff value under Section 14(2) of the Customs Act, the assessment should be done in accordance with Boards Circular No. 96/2002. This is because the Board only clarified a specific doubt in respect of cases where customs duty is chargeable on ad valorem basis. Further, the case of NOCIL (supra) related to goods which were chargeable to specific rate of duty. We also note that the letter of Commissioner of Customs (Imports) F.No. S/58/154/2006/APPG(Min.) dated 14.9.2006 on which the learned Counsel is relying is merely a view expressed to his Chief Commissioner and is not a Trade Notice to be necessarily followed by Trade and Departmental officers.
6.2 The learned Counsel had also raised the argument that the Board Circular of 2006 cannot be applied retrospectively. We note that the issue in the present case is to be decided on the basis of law and the question of retrospective application of the Circular does not arise.
6.3 For a legal examination of the issue at hand, we may go back to the provisions of law. Duty under the Customs Act is charged under Section 12. The rates of duty are specified under the Customs Tariff Act, 1975. Where the goods are leviable to specific rate of duty, the question of quantity imported becomes very relevant. In such cases, the judgment of the Apex Court in the case of NOCIL (supra) is very clear that the duty is to be charged on the basis of quantity received in the shore tanks. The doubt which has arisen in the present case relates to situations where tariff value is adopted for assessment purposes and duty is charged on ad valorem basis. For convenience, we may extract the relevant sections i.e. Section 14(1) and Section 14(2) of the Customs Act, as under: -
14(1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf ..
14(2) Notwithstanding anything contained in sub-section (1), if the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. ..
Section 14(1) says that the value of imported goods shall be the transaction value of such goods when sold for export to India for delivery at the time and place of importation. Thus it is the transaction value i.e. invoice value which is relevant in normal cases. However, Section 14(2) deals with the goods for which tariff values are fixed as in the present case. By fixing of tariff value, there is no option left with the assessing officer but to consider the tariff value fixed per unit quantity. Further, for determining the duty payable, the ad valorem rate of duty applicable is to be applied to the tariff value as done even in the case of transaction value. The application of tariff value only means that the value has been fixed and need not be determined under the provisions of Section 14 read with the Customs Valuation Rules. We find that reliance by Revenue on Circular of 2006 is not correct. The valuation aspect should not be confused with the aspect of duty payable on goods. Section 14 determines the value of goods for delivery at the time and place of importation. Thus, what is important is to see the value of goods imported i.e. value of goods that have landed and reached the Customs barrier. And duty has to be charged on goods actually imported as per apex Court judgment in the case of NOCIL (supra).
6.4 Therefore the real question to be answered is whether the total duty payable will be the duty on the proportionate value of goods received in shore tanks or on the total transaction value. It was held by the Hon'ble Supreme Court in the case of Garden Silk Mills vs. Union of India 1999 (113) ELT 358 (SC) that the import of goods is completed when the goods become part of the mass of goods within the country, the taxable event being reached at the time when the goods reach the customs barriers. The Honble Court held -
17. It is further submitted that in the case of Apar's Private Ltd. this Court was concerned with sections 14 and 15 but here we have to construe the word "imported" occurring in section 12 and this can only mean that the moment goods have entered the territorial waters, the import is complete. We do not agree with the submission. This Court in its opinion in Re. The Bill to Amend Section 20 of the Sea Customs Act, 1878 and Section 3 of the Central Excises and Salt Act, 1944, 1964 (3) SCR 787 at page 823 observed as follows :
Truly speaking, the imposition of an import duty, by and large, results in a condition, which must be fulfilled before the goods can be brought inside the customs barrier i.e. before they form part of the mass of goods within the country It would appear to us that the import of goods into India?18. would commence when the same cross into the territorial waters but continues and is completed when the goods become part of the mass of the goods within the country, the taxable event being reached at the time when the goods reach the customs barriers and the bill of entry for home consumption is filed. This being the legal platform, we note that in case of NOCIL (supra), the Hon'ble Supreme Court affirmed that duty can only be charged on the quantity received in the shore tank. The same view has been reaffirmed by Tribunal in the cases of Ruchi Infrastructure Ltd. (supra) and General Foods (supra). The law as it exists clearly lays down that the value on which duty is payable will be the value of goods actually imported into the shore tanks.
7. In view of the above, we set aside the impugned order and allow the appeal with consequential relief, if any, in accordance with law.
(Pronounced in Court on )
(Anil Choudhary) (P.S. Pruthi)
Member (Judicial) Member (Technical)
Sinha
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