Customs, Excise and Gold Tribunal - Delhi
Ceat Tyres Of India Ltd. vs Collector Of Customs on 28 March, 1990
Equivalent citations: 1990(27)ECC166, 1990(30)ECR469(TRI.-DELHI), 1990(49)ELT387(TRI-DEL)
ORDER I.J. Rao, Member (T)
1. All these 82 appeals filed against various orders passed by the Collectors (Appeals) involve common questions. We, therefore, heard them together and proceed to dispose of them by this common order.
2. Shri Ganesh, the learned Advocate for the appellants submitted that in appeal No. C/2525/88-A all the relevant papers are there and the facts in all other appeals being the same, documents in this folder may be referred to. He then submitted that the point involved in these appeals is whether landing charges for the purpose of calculating the assessable value of imported goods for levy of customs duty should be separately added when the freight paid by the importers included landing charges also and such charges if they had to be paid should have been paid by the shippers who carried the goods. Another point raised by Shri Ganesh was that the Customs not having given a notice for inclusion of wharfage charges in the assessable value and the Collector (Appeals) having given a clear finding that wharfage charges do not form part of the assessable value, the Department should not be allowed to include wharfage charges in the assessable value at this stage. The appellants in all these cases imported small consignments consisting of raw materials and these imports took place through regular shipping lines. The learned Advocate submitted that these goods were landed and delivered by the shipping companies without any extra charges as freight including landing charges, and payment if at all necessary, for using the docks' equipment, was paid by the shipping company. The learned Advocate submitted that wharfage charges are levied only when warranted under circumstances like the importers keeping their goods too long in the wharf but landing charges were being collected on the basis of a fixed percentage in the case of all importations.
3. In the background of these submissions, Shri Ganesh made 3 propositions and stated them to be the contentions of the appellants.
(i) landing charges are not includible at all as import of goods is complete as soon as they enter the territorial waters. Making this proposition the learned Advocate fairly accepted that several judgments of High Courts as well as of the Tribunal were against him especially one, Super Traders and Anr. v. Union of India and Ors. (1983 (12) ELT 258 Delhi); & MRF Ltd. v. CC, Madras [1987 (31) ELT 313].
(ii) The second proposition made by the learned Advocate was that all through the Customs sought to calculate only the amount of landing charges in the assessable value and not wharfage charges and no proceedings to include the wharfage were ever initiated. He submitted that the Collector (Appeals) gave a clear finding on the issue of wharfage charges in favour of the appellants and, therefore, the Department should not now be allowed to seek the inclusion of the wharfage charges in the assessable value.
(iii) the third proposition made by the learned Advocate was that the landing charges were already included in the freight paid by the appellants to the shippers and no additional charges were paid to the shipping company, Port Trust or any others. The appellants did not incur any expense for landing and it is not the case of the Customs Department that they incurred any such expenses. Therefore, landing charges should not be added to the assessable value.
(iv) Finally and as his 4th proposition Shri Ganesh submitted that if these three contentions are not accepted and if wharfage charges are found to be includible in the value they should be included only on the basis of actuals for which the appellants would produce receipts issued by the Bombay Port Trust. There should not be any notional addition in respect of wharfage charges.
4. Shri G.V. Naik, the learned Jt. CDR opposing the arguments submitted that the import of the goods is not complete till they are landed, pass through Port Trust and later placed before the Customs for assessment. In support of his arguments he relied on a judgment of the Supreme Court in the case of Khandelwal Metal & Engineering Works v. Union of India reported in 1985 (20) ELT 222 (S.C.). (We asked him to point out the relevant para of the judgment but that was not done). He further relied on a judgment of the Karnataka High Court in B.S. Kamath & Co. and Ors. v. Union of India and Ors. reported in 1986 (24) ELT 456 (Kar.) and submitted that the High Court clearly held that landing charges were to be included in the assessable value.
5. Shri Naik then submitted that at no stage was it the case of the appellants that the freight paid by them to the shippers included landing charges. He emphasised that no documents have been placed by the appellants before the Customs or the Tribunal to show that freight paid by them included landing charges.
6. Shri Naik accepted that the question of including wharfage charges as distinct from landing charges cannot be agitated now as it was not the case of the Customs at any stage. Reiterating that landing charges worked out on the percentage of the value should be added to the assessable value, Shri Naik relied, especially, on a judgment of the Gujarat High Court in Prabhat Cotton and Silk Mills Ltd. v, Union of India reported in 1982 ELT 203 Gujarat. He cited two other judgments with the same ratio.
7. In his rejoinder Shri Ganesh submitted that in the decisions cited by the learned Jt. CDR the question of twice charging customs duty on landing charges was not considered. He submitted that as freight included landing charges, addition of landing charges once again to the assessable value would lead to charging customs duty on the landing charges, twice over. He submitted that he does not oppose the inclusion of the landing charges but as these charges were already included in the freight they should not be again added to the value. The learned Advocate argued that landing charges may be included in the freight or may not be, depending on the conditions of the contract. But if the conditions are that the landing charges would be included, there should not be a second addition of them to the assessable value. Referring to Shri Naik's arguments that no documents were placed to show freight included landing charges the learned Advocate referred to ground of appeal (No. 10) before the Collector and submitted that the appellants having made a claim that landing charges should not be included, it was upto the Customs Department to prove that freight did not include landing charges therein. Referring to the judgment in 1987 (31) ELT 313 Tribunal in MRF Ltd. v. CC, Madras, the learned Advocate submitted that a similar point was raised therein and the plea that only actual landing charges should be included was rejected not in principle but only for want of evidence.
8. Finally the learned Advocate pleaded that the addition of landing charges on a notional basis may cause discrimination between importers inasmuch as in some cases the agreement with the shipping company may be for payment of freight including landing charges (and once again landing charges are added to the value) and in other cases the agreement may be for freight without landing charges in which case the amount of landing charges is added only once.
9. We have considered the submissions of both sides. Inasmuch as the Customs at no stage threatened addition of wharfage charges to assessable value it appears to us that the ground pertaining to the same is totally redundant. We have taken note of the annexure to the refund claim and shall be commenting on it in another part of the order. But the result is that the only point to be decided by us is whether the appellants are liable to pay customs duty on the landed value + landing charges. Even about this question there is no doubt because in several judgments beginning with Prabhat Cotton & Silk Mills Ltd. (supra) it has been consistently held that landing charges form part of the assessable value. Therefore, for deciding these matters we have only to decide whether the appellants' plea that freight included landing charges is sustainable and whether calculating landing charges as a percentage of the value is correct.
10. A perusal of the refund application (Form A with its enclosures) revealed an interesting situation. In the working sheet attached the calculation for refund amount due was arrived at as follows :
"Working Sheet 12 Pallets & 1 Carton s.t.c. Natural Fossil Wax Antilux-654 Duty B/E Cash No. HD-848 dtd. 9-12-1986 Landing charges as per B/E .... Rs. 918.00 Actual Wharfage charged by BPT .... Rs. 81.11 ______ Difference Rs. 836.89
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Duty paid on Rs. 836.89 at 60% . . Rs. 502.13
Plus 40% . Rs. 334.76
Plus 20% . Rs. 334.76
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Refund amount due Rs. 1171.65"
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This makes it quite clear that the appellants wanted the landing charges to be taken as actual wharfage charged by the BPT. In the grounds of claim which also forms an annexure to this particular refund as (which according to the learned Advocate is the same in all these appeals) the language employed is somewhat confusing as the appellants say that "the Port Trust have charged only an amount of Rs. 81.11 towards landing charges as per copy of receipt of Bombay Port Trust enclosed"). It appears that the appellants were trying to tell the Customs that landing charges are nothing but wharfage charges. More important is that they were calling wharfage by the name of landing charges as can be seen from the enclosure. A receipt placed before us shows that it was wharfage and demurrage charges which were paid by the appellants and received by the Port Trust and not landing charges. Therefore, it appears that on the one hand the appellants' case before the Assistant Collector was entirely different and on the other hand the appellants themselves did not say that landing charges were included in the freight. The learned Advocate specifically invited our attention to paragraph 10 of the grounds of appeal before the Collector. In this ground the appellants state that (i) the amount attributable to landing charges were paid by the shipping company and form part of the freight, (ii) As the appellants are required to load their value by 0.75% they would be paving customs duty twice over. One of the grievances of Shri Ganesan was that the Collector (Appeals) did not dispose of this ground. However, since this ground was before the Collector (Appeals) and before us we examined it.
11. We had earlier observed that the appellants did not place before us any receipts for evidencing payment of landing charges (as distinct from wharfage charges). If the shipping company paid these charges to the Port Trust (which for reasons recorded appears to be improbable) that company would have been given a receipt and it was easy for the appellants to produce the receipt. No such receipt was produced at any stage or before us. Besides, there is a vital circumstance which goes against the claim of the appellants. This circumstance is that at no stage including before us did the appellants produce a single contract executed with the shippers to show that landing charges were included in the freight. Besides, in their appeal to the Collector (Appeals), they have stated in ground No. 7 of the grounds of appeal that "even the Bombay Port Trust has denied that it imposes any landing charges upon goods imported. However, when specifically asked by the Bench, whether they could substantiate this statement, the appellants could not do so. Therefore, the appellants' case has to fail for want of evidence.
12. We gave careful thought to Shri Ganesh's submissions that it was upto the Customs to show that freight did not include landing charges. A principle advanced by Shri Ganesh himself, namely that a negative need not be proved and cannot be proved applies equally to this situation also and more justly because, CIF value includes freight and freight only and not landing charges. Further, when the appellants sought relief, it was upto them to prove their claim; Customs need not go fishing for evidence. Besides, over a long period in all the Ports of India landing charges have been calculated as a percentage of CIF value. Such calculation is not whimsical or arbitrary. Several reasons are there for such a practice continuing over so many decades without being seriously challenged. One reason is that the procedure for ascertaining the actual landing charges would in most cases cost more to the importers as well as the country. This is so because bills of entry are filed and assessed (in most cases) long before the goods are landed and in any event long before the Port Trust can find out the actual charges in respect of each consignment. If bills of entry are held up for want of this information only, the demurrage paid by the importer will be several times more than what could have been possibly saved by paying customs duty only on actual landing charges. Secondly, in respect of some importers the addition to value is less than the actual charges which in respect of some other importers the addition is a little more. The percentage is arrived at on the basis of a well established procedure which takes into consideration the total value of the imports and the total landing charges and averages them out. This procedure ensures uniformity, speed and certainty which are all essential characteristics of a good Tax. Therefore, the practice of the Customs in adopting this method (uniformity in terms of percentage) cannot be found fault with if the overall interests as well of the importers and the country are kept in mind. Besides, value under Section 14 being a 'deemed' value, we find nothing illegal in the practice.
13. We have made these observations because the appellants' pleas suggested directly or indirectly, that there is something arbitrary especially in adding the landing charges to CIF value under the present system. We had already observed that the claims made by the appellants cannot be sustained for want of evidence. We see no provision in Customs Act to support their claims. Therefore, both on first principles and in the facts and circumstances of this case, we find no merit in these appeals.
14. We, therefore, dismiss all these appeals.