Custom, Excise & Service Tax Tribunal
Rahtriya Chemicals And Fertilizers Ltd vs Mangalore-Cus on 2 April, 2024
C/21696/2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 21696 of 2016
(Arising out of Order-in-Appeal No. 436/2016 dated 29.06.2016
passed by the Commissioner of Customs (Appeals), Bangalore.)
M/s. Rashtriya Chemicals &
Fertilizers Ltd.
Priyadarshini, Appellant(s)
Eastern Express Highway,
Sion,
Mumbai - 400 022.
VERSUS
The Commissioner of Customs
C.R. Building,
P.b. No.5400, Respondent(s)
Queens Road, Bangalore - 560 001.
APPEARANCE:
Mrs. Lalitha Phadke, Advocate for the Appellant. Shri K. A. Jathin, Authorised Representative for the Respondent CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL) Final Order No. 20272 /2024 DATE OF HEARING: 02.04.2024 DATE OF DECISION: 02.04.2024 PER : R. BHAGYA DEVI The appellant M/s. Rashtriya Chemicals and Fertilizers Ltd had filed a Bill of Entry No. 5311965 dated 28.11.2011 for the clearance of Muriate of Potash which was self-assessed declaring the value at USD 484.75 Per Metric Ton (PMT) and cleared the goods on payments of duty. At a later date, the audit had noticed that as per the High Seas Sales Agreement, the purchase price was USD 484.75 PMT and it is also mentioned that the seller had agreed to give 180 days Page 1 of 6 C/21696/2016 credit from the date of Bill of Lading. On the 180th day, the payment made to the supplier in terms agreement was Rs.
66,87,70,836/-. Since at the time of clearance of the goods, the value of the goods was Rs. 66,87,70,836/- which was less than the actual amount paid to the seller after 180 days, differential duty was demanded and accordingly Rs.15,63,856/- was confirmed under the provisions of Section 28(1) of the Customs Act, 1962 read with Section 28(4) of the Customs Act, 1962 and equal amount of penalty was also imposed on the appellant.
2.1 The learned counsel submits that they had entered into a High Seas Sales Agreement dated 18.11.2011 for the consignment of Muriate of potash for the quantity of 27028.650 Metric Tons. The price in US Dollars between the original exporter and original importer (Indian Potash Ltd.) was USD 487 PMT. The High Seas Seller and the Appellant (importer) was Rs.484.75 PMT and accordingly, the bill of Entry 5311965 dated 28.11.2011 was filed for the above quantity declaring the value as USD 484.75 PMT. On the date of presenting the Bill of Entry, the exchange rate was Rs.50.05 per dollar. The first mistake committed by the authorities is to take the value as USD 487 PMT instead of USD 484.75 PMT.
2.2 It is also submitted that the second issue is with regard to the exchange rate, whether the exchange rate to be applied is as on date of presentation of the Bill of Entry or on the date of actual payment by the appellant to the High Seas Seller. As per the proviso to Section 14 of the Customs Act, the rate of exchange as in force was on the date on which Bill of Entry is presented under Section 46 or shipping bill of export under Section 50. In view of the clear legal provisions, the appellant was right in taking into consideration the exchange rate on the date of filing the Bill of Entry. He relied on the following decisions a. Fertilizers and Chemicals, Travancore Ltd. Vs. CC, Cochin:
2014 (300) E.L.T. (Tri-Bang.) Page 2 of 6 C/21696/2016 b. Sunshine Metal & Alloys Industries Pvt. Ltd. Vs. Collr. of Cus., Kandla 2002 (139) E.L.T. 130 (Tri-Mumbai) c. Ever Bright Plastic Pvt. Ltd. Vs. Collector of Customs 1993 (65) E.L.T. 196 (Cal.) d. Trio Marketing Pvt. Ltd. Vs. UOI 2000 (122) E.L.T. 32 (Mad.) e. UMI Special Steel Ltd. Vs. CC, Bhubaneshwar 2001 (137) E.L.T. 174 (Tri-Cal) f. Tata Hitachi Construction Machinery Co. Ltd. Vs. C. C., Chennai 2019 (370) E.L.T. 1624 (Tri-Chennai) 2.3 The third issue is denial of exemption of CVD under Serial No.63 of the Notification No.4/2006 CE dated 01.03.2006. Serial No.63 reads as follows:
Sr. Chapter Description Rate Condition No. Heading
63. 31 All goods, other than those NIL -----
which are clearly not to be used-
(a) As fertilizers;
(b) In the manufacture
of other fertilizers, whether
directly or through the
stage of an intermediate
product
2.4 The learned counsel further submits that the appellant is the manufacturer and distributor of the fertilizers having License under Fertilizers Control Order. The impugned product Muriate of Potash is sold to the farmers and the society of the farmers as a fertilizer and therefore, the benefit of the Notification cannot be denied. Lastly, there is no suppression of facts or misdeclaration that is brought on record in the first notice dated 16.11.2012 issued by invoking the normal period and the reply dated 17.08.2012 was filed but however, the notice was kept in abeyance. The second notice which is the impugned notice was issued on 22.03.2013, almost after 19 months by invoking the extended period under Section 28(1) read with Section 28(4) of the Customs Act, 1962. The second show-cause notice is barred by limitation and relies on the decision of the Supreme Court in the case of Nizam Sugar Factory Vs. Collector of C.E. A.P.:
Page 3 of 6C/21696/2016 2006 (197) E.L.T. 465 (S.C.) and NRB Bearings Limited Vs. CC, Mumbai 2015 (322) E.L.T. 599 (S.C.).
3. The learned Authorized Representative (AR) on behalf of the Revenue reiterated the findings of the authorities below and held that the demand was justified for the reasons that as the amount actually paid to the High Seas Seller was more than what was declared in the Bill of Entry.
4. Heard both Sides. The simple issue to be decided is what is the value to be adopted for the purpose of levy of duty; whether the declared value as per the Bill of Entry or the actual payment made to the High Seas Seller by the importer.
4.1 From the records, it is clear that the price of the imported product Muriate of Potash is USD 484.75 PMT and the price paid to the High Seas Seller is also USD 484.75 PMT. The differential value arose only on account of the exchange rate, the exchange rate was Rs.50.05 per US Dollar on the date of filling of the Bill of Entry i.e. 28.11.2011 and on the date of actual payment by the appellant to the High Seas Seller, the exchange rate was Rs.62.68 per US Dollar and hence, the change in value from Rs.66,87,70,836/- to 68,67,86,485/-. As per the proviso to Section 14, (reproduced below) rate of exchange as in force on the date of filing the Bill of Entry.
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:
Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of Page 4 of 6 C/21696/2016 importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf:
Provided further that the rules made in this behalf may provide for,-
(i) the circumstances in which the buyer and the seller shall be deemed to be related;
(ii) the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case;
(iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this Section, 2 [(iv) the additional obligations of the importer in respect of any class of imported goods and the checks to be exercised, including the circumstances and manner of exercising thereof, as the Board may specify, where, the Board has reason to believe that the value of such goods may not be declared truthfully or accurately, having regard to the trend of declared value of such goods or any other relevant criteria] Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46 or a shipping bill of export, as the case may be, is presented under Section 50.....
Emphasis Supplied 4.2 The Hon'ble High Court of Calcutta in the case of Ever Bright Plastic Pvt. Ltd. Vs. Collector of Customs (supra), and the Hon'ble High Court of Madras in the case of Trio Marketing Pvt. Ltd. Vs. UOI (supra) have also categorically held that the applicable exchange rate is as on the date of filing of the Bill of Entry.
4.3 As can be seen from the Notification which has been reproduced above, the benefit of Notification is eligible for all those who use the goods as fertilizers or in the manufacture of other fertilizers whether directly or through the stage of an intermediate product. The appellant being a manufacturer and distributor of fertilizers having license under Fertilizers Controls Order and having cleared the same as a fertilizers to the Page 5 of 6 C/21696/2016 farmers, the question of denying the benefit does not arise. Therefore, the benefit of the Notification is extended and the demand of differential duty on account of difference in the rate of exchange is set aside. Appeal is allowed.
(Operative portion of the order was pronounced in Open Court on conclusion of the hearing.) (D.M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 6 of 6