Custom, Excise & Service Tax Tribunal
M/S. Sesa Goa Ltd vs Commissioner Of Central Excise, ... on 12 December, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
EAST ZONAL BENCH: KOLKATA
1-2) CUSTOMS APPEAL NOs.C/A/114-115/2010
3-13) CUSTOMS APPEAL NOs.C/A/1A & 31-40/2011
14-22) CUSTOMS APPEAL NOs.C/A/154-162/2011
23-25) CUSTOMS APPEAL NOs.C/A/171-173/2011
AND
26-31) CUSTOMS APPEAL NOs.C/A/223-228/2011
(ARISING OUT OF THE FOLLOWING ORDERS:
FOR SL. NOs.1-2) ORDER-IN-APPEAL NO.7-8/CUS/B-I/2010 DATED 10.03.2010;
FOR SL. NOs.3-13) ORDER-IN-APPEAL NO.57-67/CUS/BBSR-I/2010 DATED 11.10.2010;
FOR SL. NOs.14-22) ORDER-IN-APPEAL NO.09-17/CUS/BBSR-I/2011 DATED 24.01.2011;
FOR SL. NOs.23-25) ORDER-IN-APPEAL NO.18-20/CUS/BBSR-I/2011 DATED 10.02.2011;
FOR SL. NOs.26-31) ORDER-IN-APPEAL NO.26-31/CUS/BBSR-I/2011 DATED 31.03.2011
ALL PASSED BY COMMISSIONER (APPEALS), CENTRAL EXCISE, CUSTOMS & SERVICE TAX, BHUBANESWAR)
FOR APPROVAL AND SIGNATURES OF
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER
DR. I.P.LAL, HONBLE TECHNICAL MEMBER
1. Whether Press Reporters may be allowed to see :
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 :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
M/S. SESA GOA LTD.
APPELLANT (S)
VERSUS
COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, BHUBANESWAR-I
...RESPONDENT (S)
APPEARANCE:
SHRI R.PATODIA, FCA FOR THE APPELLANT(S);
SHRI S.CHAKRABORTY, A.R.(ASSTT. COMMR.) FOR RESPONDENT(S).
CORAM:
DR. D.M.MISRA, HONBLE JUDICIAL MEMBER DR. I.P.LAL, HONBLE TECHNICAL MEMBER Date of Hearing & Decision:12.12.2013 ORDER NO.FO/A/71188-71218/2013 Per Dr. D.M.Misra:
These Appeals are filed against the afore-mentioned Orders-in-Appeal passed by the ld. Commissioner (Appeals) Bhubaneswar. Since the issue involved is common, accordingly, all these Appeals, are taken up together for disposal.
2. Briefly stated the facts are that the Appellant being an exporter of iron ore fines, filed shipping bills before the Customs Authorities at Paradeep Port, for the period after 01.01.2009 declaring the FOB price of the said goods. It is their contention that the FOB price be considered as cum-duty price as it includes the export duty, hence, ought to be excluded in arriving at the assessable value, under Section 14 of the Customs Act, 1962 for determination of export duty. The Department, on the other hand, referring to a Boards Circular No.18/2008-Cus. dated 10.11.2008 and applying the provisions of Section 14 of Customs Act,1962, rejected the contention of the Applicant to treat the FOB price as cum-duty price for the purpose of determination of export duty under Section 14 of the Customs Act, 1962 and the shipping bills were assessed by the Revenue, accordingly, considering it as transaction value. Aggrieved by the said assessment Orders, the Appellant had preferred appeals before the ld. Commissioner (Appeals) who had confirmed the assessment orders passed by the adjudicating authority and rejected the Appeals. Hence, the present Appeals.
3. The Ld. Advocate for the Appellant submits that the Appellant had not received any amount, in addition to the FOB price, towards the export duty discharged by them. Hence, the export duty that had not been recovered from the customers separately, in addition to the FOB price, and it being a part of the total realization i.e.FOB price, the same requires to be deducted from the FOB price in arriving at the assessable value. Precisely, his contention is that the FOB price be considered as the cum-duty price, a practice, according to him, had been followed since inception of the Customs Act,1962. The second line of the argument advanced by the Ld. Advocated is that Customs Duty being an indirect tax, and the fundamental principle of an indirect tax is to pass on the burden of duty to the ultimate buyer/consumer of the goods; hence, the export duty if not recovered from the buyer, then, the FOB price be considered as cum-duty price and not transaction value. It is his contention that Indirect Taxes such as excise duty, customs duty, sales tax, octroi etc. are the taxes on commodity and the burden of these taxes is connected with the commodity and is meant to be ultimately borne by the consumers, who pay these duties/taxes. It is the commodity which bears the incidence of tax and carries with it the burden of tax. It is his submission that all these aspects are not considered by the Tribunal, while deciding the case on similar issue, reported as Sesa Goa Ltd. vs. CCE & ST, Goa, 2012(277)ELT 105(Tri.-Mum.).
4. Per contra, ld. AR for the Revenue reiterates the findings of the ld. Commissioner (Appeals). He has submitted that the issue is no more res-integra and is covered by the decision of this Tribunal of Mumbai Bench of this Tribunal in the Appellants own case. Further, he has submitted that the incidence or nature of Customs Duty, which is popularly called as an indirect tax, cannot, in any manner, be the decisive factor for determination of value of export goods under Section 14 of Customs Act,1962.
5. Heard both sides and perused the records. Undisputedly, the period involved in the present case is after 01.01.2009 and the issue of similar nature has been cropped up recently before the Co-ordinate Bench at Mumbai. Analysing the issue in detail and considering the arguments advanced by both sides, relevant statutory provisions and various case laws on the subject, the findings are recorded as follows:
7.?We have given careful consideration to the submissions. The learned counsel has, at the outset, referred to one of the contracts under which iron ore was supplied to a foreign buyer. One of the provisions of this contract is to the effect that all levies on export of iron ore in the country of origin shall be for account of seller and all levies on import in the country of destination shall be for buyers account. This provision of the contract further says that, if, during the tenure of this contract, the country of origin imposes any levy on export of ore higher than what existed on the date of commencement of the contract, or if the rate of levy is substantially increased, the unshipped balance under the contract may be cancelled by the seller or the buyer upon receipt of notice of such event. Another provision of this contract made it obligatory for the buyer to pay the FOB price as agreed between them and the seller. These provisions of the contract would appear to show that these appellants received the FOB price of the goods from the overseas buyers and further that the seller and the buyer would be liable to pay all the levies by the governments of their respective countries. In other words, the contract did not permit the incidence of such levy (e.g. export duty) in any of the countries to pass on to the other country. This aspect of the contract, in our view, is in keeping with the legal principle embodied in Section 14 of the Customs Act, which provides that the transaction value of export goods, for the purpose of export duty, shall be the price paid or payable for the goods when sold for export at the time and place of export. It is not in dispute that the time and place of export referred to under Section 14 are, respectively, the time and place of shipment of the goods. The price of the goods at the time and place of shipment is its FOB price, whether paid or payable. The law declares that this shall be the transaction value for the purpose of levy of export duty. It does not make provision for abatement of duty element from the FOB price so as to arrive at the assessable value for the purpose of levy of export duty. As rightly submitted by the learned SDR, the provisions of Section 14 are clear and free from any ambiguity. The Honble Supreme Court, in the case of Grasim Industries (supra) held as under:
8.?No words or expressions used in any statute can be said to be redundant or superfluous. In matters of interpretation one should not concentrate too much on one word and pay too little attention to other words. No provision in the statute and no word in any section can be construed in isolation. Every provision and every word must be looked at generally and in the context in which it is used. It is said that every statute is an edict of the legislature. The elementary principle of interpreting any word while considering a statute is to gather the mens or sententia legis of the legislature. Where the words are clear and there is no obscurity, and there is no ambiguity and the intention of the legislature is clearly conveyed, there is no scope for the Court to take upon itself the task of amending or alternating the statutory provisions. Wherever the language is clear the intention of the legislature is to be gathered from the language used. While doing so what has been said in the statute as also what has not been said has to be noted. The construction which requires for its support addition or substitution of words or which results in rejection of words has to be avoided. As stated by the Privy Council in Crawford v. Spooner [(1846) 6 Moore PC 1] we cannot aid the Legislatures defective phrasing of an Act, we cannot add or mend and, by construction make up deficiencies which are left there. In case of an ordinary word there should be no attempt to substitute or paraphrase of general application. Attention should be confined to what is necessary for deciding the particular case. This principle is too well settled and reference to few decisions of this Court would suffice. [See : Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests, Palghat and Anr. (AIR 1990 SC 1747), Union of India and Anr. v. Deoki Nandan Aggarwal (AIR 1992 SC 96), Institute of Chartered Accountants of India v. Price Waterhouse and Anr. [1997 (6) SCC 312] and Harbhajan Singh v. Press Council of India and Ors. (JT 2002 (3) SC 21)]. ????????????????????[emphasis supplied] In the case of Tara Agencies (supra), the Apex Court held that :
The intention of the legislature has to be gathered from the language used in the statute which means that the attention should be paid to what has been said as also to what has not been said. In the case of Plantation Corporation of Kerala (supra), the Apex Court reiterated the above rulings and held that, if the intendment was not in the words used it was nowhere else and so long as there was no ambiguity in the statutory language, resort to any interpretative process to unfold the legislative intent became impermissible. The court further held that the need for interpretation arose only when the words in the statute, were on their own terms, ambivalent and did not manifest the intention of the legislature. The above rulings were followed by this Tribunal in the case of Peshawar Soaps & Chemical Works (supra). We have to interpret the provision of Section 14(1) of the Act, keeping in view the above rulings of the Apex Court. Section 14 reads as follows:
SECTION 14. Valuation of goods. - (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: According to the above provision, the value of the export goods shall be the transaction value of such goods, i.e. to say, the price actually paid or payable for the goods when sold for export from India for delivery at the time and place of exportation. As it is not the case of the Revenue that the sellers (exporters) and the overseas buyers of the goods are related, what needs to be examined in this case is whether the FOB price of the subject-goods should be taken as the transaction value of the goods. It is not in dispute that the price actually received by the appellants from their overseas customers as consideration for iron ore exported by them was FOB price. The only case of the appellants is that the export duty element should be allowed to be deducted from this FOB price to arrive at the transaction value of the goods for the purpose of assessment to export duty. We have not been able to discern anything from the above provision of law so as to accept the appellants case. In our view, the above provision of law is plain and clear and the same does not allow abatement of duty element from the FOB price in determining the transaction value for the purpose of assessment to export duty.
8.? Learned counsel has emphatically submitted that, if such abatement is not allowed, duty will have to be paid on an amount of duty comprised in the FOB value. In this context, he has argued that duty is not goods and hence not exigible to duty. We are unable to accept this proposition of the counsel inasmuch as, in the case of export of goods, what is assessed to duty is goods and its value only provides a quantitative basis for the duty to be paid by the exporter. According to the learned counsel, the FOB price is cum-duty price and the duty element cannot be charged to export duty. We have not accepted the FOB price to be a cum-duty price. In this case, we have come across a contract dated 1-4-2005 which provided for export of iron ore by the appellant to overseas buyer at the FOB price agreed between the parties. This contract was meant to be in operation from year to year. To say that the FOB price agreed between the parties is cum-duty price would mean that the contracting parties were aware of the rate of export duty for the goods exported in a given calendar year, at the very commencement of the year. If the rate of export duty changes midway in the particular year, how could the contracting parties incorporate the duty element in FOB price at the commencement of the year in respect of goods sold after such change of rate of duty? The above proposition made by the learned counsel is, therefore, unworkable under the contracts referred to by him, nor is it in accord with the provisions of Section 14(1) of the Act. It is in this scenario that we have rejected the plea that the FOB price of the export goods was a cum-duty price. We have already held that the FOB price of the goods was the price actually paid or payable by the buyer to the exporter in respect of the goods exported for delivery at the time and place of export and the same would not contain any duty element. Therefore, there is no question of any duty being levied on any amount of duty.
6. We do not find substance in the arguments of the ld. CA for the Appellant, nor any change in circumstances to differ with the interpretation and observation on the relevant provisions of the Customs Act and its applicability to the present case, as stated above, by the Co-ordinate Bench at Mumbai.
7. The second line of argument advanced by the ld. CA for the Appellant, which he claims, has not been taken note of by the Mumbai Bench, is that the Customs Duty, being an indirect tax and an indirect tax by its nature, is always passed on to others; hence, if the duty cannot be passed on, then the same ceases to be an Indirect tax and accordingly, is contrary to the principle of levy of Indirect tax. Putting in its simpler version, his argument is that in the present case, since the Customs (Export) Duty cannot be passed on to the overseas purchaser, by adding it to the FOB value, in view of the stipulation in the contract of sale, therefore, the FOB value be considered as Cum-Duty Price, so as to make the export duty compatible with its nature as an Indirect Tax. We do not find merit and substance in the said argument of the ld. CA for the Appellant. The principle has been well settled by the Honble Supreme Court in a catena of cases. While examining the vires of the retrospective legislation relating to excise duty, in the case of Chhotabhai Jethabhai Patel & Co. vs. UOI & Anr., 1999(110)ELT 118(SC), Honble Justice Mr. Iyenger, analysing the judgments delivered by Privy Council, Canadian and Australian courts on the subject, observed as follows:-
20.?Learned Counsel conceded, as he had to, that even on the decisions relied upon by him, the fact that owing to the operation economic forces it was not possible for the taxpayer to pass on the burden of the tax, did not alter the nature of the imposition and detract from its being a duty of excise. For instance, the state of the market might be such that the duty imposed upon and collected from the producer or manufacturer might not be capable of being passed on to buyers from him. Learned Counsel urged that this would not matter, as one had to have regard to the general tendency of the tax and the expectation of the taxing authority and to the possibility of its being passed on and not to the facts of any particular case which impeded the operation of natural economic forces.
21.?The impediment to the duty being passed on might be due not merely to private bargains between the parties or abnormal economic situations such as the market for a commodity being a buyers market. Such impediments may be brought about by the operation of other laws which Parliament might enact, such for instance, as control over prices. If in such a situation were the price which the producer might charge his buyer is fixed by the statute, say under the Essential Supplies Act, and a duty of excise is later imposed on the manufacturer, it could not be said that the duty imposed would not answer the description of an excise duty. Learned Counsel had really no answer to the situation created by such a control of economy except to say that it would be an abnormal economic situation. It could hardly be open to argument that a tax levied on a manufacturer could be stated not to be a duty of excise, merely because by reason of the operation of other laws the tax payer was not permitted to pass on the tax-levy. The retrospective levy of tax would be one further instance of such inability to pass on, which does not alter the real nature or true character of the duty.
22.?It might further be pointed out that the submission of the learned Counsel that a tax which according to economic theory is an indirect tax or a tax on goods becomes a direct and a personal tax and a tax of a different nature or category if imposed retrospectively, because it was then incapable of being passed on, does not correctly represent the law as laid down by this Court. In common with duties of customs and excise, a tax on the sale of goods is another instance of a typical indirect tax. Indeed Lord Thankerton pointed out in 1934 AC 45:
The ultimate incidence of the tax in the sense of the political economist is to be disregarded and referred to a tax imposed in respect of some dealings in commodities such as their import or sale or production for sale as instances of indirect taxes, the tax not being a peculiar contribution upon one of the parties to the trading in the particular commodity selected as the tax-payer. The question of the validity of the imposition of a sales tax with retrospective effect came up for consideration before this Court in the Tata Iron & Steel Co. Ltd. v. State of Bihar, 1958 SCR 1355. An argument similar to the one now presented before us was submitted to this Court in challenge of that levy which was summarized by Das. C.J. in these terms:
The retrospective levy by reason of the amendment of Section 4(1) (of the Bihar Sales-tax Act which was impugned) destroys its character as a sales tax and makes it a direct tax on the dealer instead of an indirect tax to be passed on to the consumer. Dealing with this point the learned Chief Justice said:
The argument is that sales-tax is an indirect tax on the consumer. The idea is that the seller will pass it on to his purchaser and collect it from them. If that is the nature of the sales-tax then, urges the learned Attorney-General, it cannot be imposed retrospectively after the sale transaction has been concluded by the passing of title from the seller to the buyer, for it cannot, at that stage, be passed on to the purchaser........ Once that time goes past, the seller loses the chance of realising it from the purchaser and if it cannot be realised from the purchaser, it cannot be called sales-tax. In our judgment this argument is not sound. From the point of view of the economist and as an economic theory, sales-tax may be an indirect tax on the consumers, but legally it need not be so...... This also makes it clear that the sales-tax need not be passed on to the purchasers and this fact does not alter the real nature of the tax which, by the express provisions of the law, is cast upon the seller......If that be the true view of sales-tax then the Bihar Legislature acting within its own legislative field had the powers of a sovereign legislature and could make the law prospectively as well as retrospectively. We do not think that there is any substance in this contention. In our judgment this passage covers the argument regarding a duty of excise getting its essential nature altered and ceasing to be a duty of excise if imposed retrospectively. The submission, therefore, lacks any force and is rejected. [emphasis supplied]
8. After reading the above passage, we have no hesitation to observe that to qualify as Customs (Export) Duty, it is not necessary that the incidence of duty should always be passed on, so as to satisfy the economists principle of Indirect Tax. On the contrary, it would not be out place to mention that the present export duty on Iron Ore could have been levied by the legislature to discourage export of Iron Ore from the Country, with an objective to make it unviable for exporters, who ultimately have been intended to be saddled with the levy, instead of passing on the burden to the purchaser. In our view, the principle laid down in the aforesaid case and followed in other cases, answers the argument advanced by the ld. CA for the Appellant. On this count also, we do not find substance in the plea of the Appellant that FOB price be treated as cum-duty price and not the transaction value, as prescribed under Section 14 of the Customs Act, 1962.
9. In the result, we do not see any merit in the Appeals filed by the Appellant. Consequently, the Appeals are rejected.
(Operative part of the Order pronounced in the court.)
Sd/- Sd/-
(I.P.LAL) (D.M.MISRA)
TECHNICAL MEMBER JUDICIAL MEMBER
DUTTA/
2
C/A/114-115/10; 1A, 31-40/11;
154-162/11; 171-173/11;
& 223-228/11
2