Commissioner of Customs, Chennai v. M/s. Yeses International, (SC) BS78427
SUPREME COURT OF INDIA

Before:- N. Santosh Hegde, P. Venkatarama Reddi, JJ.

Civil Appeal Nos. 6408-64010 of 1999 D/d. 8.10.2001.

The Commissioner of Customs, Chennai - Appellant

Versus

M/s. Yeses International - Respondent

For the Appellant :- M.L. Varma, Sr. Advocate, Ms. Nisha Bagchi and B.K. Prasad Advocates.

For the Respondent :- S. Nanda Kumar, V. Vijayan and L.K. Pandey Advocates.

Customs Act, 1962, Section 14(1-A) (as inserted in 1988), Section 156 - Customs valuation (Determination of price of Imported Goods) Rules (1988), Rule 9(2) - Customs - Customs duty on imported goods evaluation of - Inclusion of wharfage charges and stock losses incurred - Held that the findings arrived at by the Appellate Authorities that these charges were includible in assesssable value, cannot be interfered with - There being devergence in approach between the two authorities with regard to the nature of the disputed items - Appeals dismissed.

[Paras 6, 7 and 8]

Cases Referred :-

Garden Silk Mills Ltd. v. Union of India (1999) 8 SCC 744.

Coromandal Fertilisers Ltd. v. Collector of Customs (2000) 115 ELT 7.

JUDGMENT

P. Venkatarama Reddi, J. - The respondent herein imported certain consignment of superior kerosene oil which was sold to it by Indian Oil Corporation on high sea sale basis. The controversy in this appeal is about the assessable value of the imported goods under Section 14 of the Customs Act 1962 . The Assistant Commissioner of Customs assessed the value on the basis of final invoices raised by Indian Oil Corporation, Madras, which included CIF value, service charges plus other charges. Amongst 'other charges' were demurrage, wharfage and stock loss. The respondent-assessee filed an appeal and contended inter alia that these charges were not includible in the assessable value for the reason that they were post-importation charges and an addition of CIF value at the rate of one per cent having already been made in terms of the Customs Valuation Rules, 1988 to cover the landing charges, no further addition could be made under the above heads. The appellate Commissioner accepted the contention of the appellant and allowed the appeal in respect of the above mentioned three items. However, the appeal was dismissed as regards bank charges and ocean losses with which we are not concerned. The appeal filed by the Revenue in CEGAT, Chennai Bench, was dismissed on 12-1-1999 following its earlier decision in final order Nos.84 and 85 of 1998 dated 16-1-1998. The learned counsel appearing for the parties are not in a position to tell us whether that order of the Tribunal has become final. Be that as it may, the legality of the Tribunal's order dated 12-1-1999 dismissing the Revenue's appeal has been assailed in this appeal by the Revenue.

2. According to Section 14 (1) of the Customs Act, the value for the purpose of charging customs duty on imported goods shall be deemed to be the price at which they are ordinarily sold or offered for sale for delivery at the time and place of importation, in the course of international trade provided that the seller and buyer have no mutual business interests and price is the sole consideration for the transaction. However, sub-section (1A) which was added to Section 14 in the year 1988 provides as follows :-

3. It is not in dispute that those provisions are applicable to the present case as the importation had taken place in 1995.

4. We shall now notice the findings of the Customs Authorities and the Tribunal. The Assistant Commissioner was of the view that whatever was charged in the final invoice including the service charges and other charges were includible in assessable value. The Appellate Commissioner, having noted the proposition that for ascertaining the price of the goods under Section 14 for the purpose of determination of assessable value one cannot go beyond the time of delivery at the place of import held that wharfage charges and charges on account of stock loss were incurred after landing and delivery of goods and, therefore, they were not includible in the assessable value. The Appellate Commissioner held that those cost factors had no relevance to the time of delivery of the goods at the place of importation. The Tribunal (CEGAT), as already noticed, followed its earlier order and quoted the extracts therefrom which read as under :-

5. Learned senior counsel for the appellants placed reliance on the decision of this Court in Garden Silk Mills Ltd. v. Union of India (1999) 8 SCC 744, to support his argument that wharfage charges and charges on account of stock-losses are includible in the assessable value as per the methodology of valuation set out in Section 14(1). In that case, the question arose whether the landing charges could be taken into account in determining the assessable value of the imported goods. On a lucid analysis of Section 14(1)(a) the Court answered that question in favour of Revenue and observed that the value has to be determined in relation to the time when physical delivery to the importer can take place and physical delivery can take place only after the bill of entry, inter alia, for home consumption is filed and it is the value at that point of time which would be relevant. It was held that the landing charges which are imposed at or after the time of the discharge of the goods and prior to the clearance being granted under Section 47 of the Act, necessarily have to be taken into account in determining the value thereof for the purpose of assessing the customs duty. At paragraph 24, this Court approved the view taken by various High Courts that the concept of value as understood in Section 14 of the Act necessarily requires the landing charges to be included therein. Landing charges "are the expenditure incurred by an importer for bringing goods on board ship to land" (vide Coromandal Fertilisers Ltd. v. Collector of Customs (2000) 115 ELT 7 Loading, unloading and handling charges referred to in clause (b) of Rule 9(2) are components of such landing charges. At present, in lieu of ascertainment of such actual landing charges, under clause (ii) to the proviso to Rule 9(2), specified percentage is added to the value.

6. The question whether wharfage charges and stock loss would form part of assessable value of imported goods did not fall for consideration in that case. Moreover at paragraph 6, it was explicitly stated that the Court was not concerned in that case with the Customs Valuation Rules of 1988. It was observed :

7. From the order of the Appellate Commissioner as well as Tribunal it is clear that landing charges at fixed percentage was added to the CIF value as provided for in Rule 9(2). Whether clause (b) of Rule 9(2) takes within its fold the charges incurred on account of wharfage is one aspect. Irrespective of that, if as held as the Appellate Commissioner, the wharfage expenses and stock losses were incurred after the delivery of the goods and on the conclusion of the event of importation, the question of including such charges in the assessable value does not arise, even according to the ratio of decision in Garden Silk Mills Ltd. (supra). The finding of the Appellate Commissioner has not been assailed in the memorandum of appeal or even in the course of arguments. Alternatively, even the finding of the Tribunal that the disputed items are components of landing charges for which extra one per cent was added, has not been assailed. The Revenue virtually invites the Court to decide a legal question in vacuum - without reference to the true factual position. The true nature of these charges and the point of time at which they were incurred cannot be appreciated without any details and relevant material before us. Even the pleadings do not bring out the material particulars. In these circumstances, we have no option but to dismiss the appeal . It is made clear that the appeals are being dismissed for want of sufficient particulars and relevant material necessary to appreciate the controversy in proper perspective. The findings arrived at by the Appellate Authorities do not therefore warrant interference though, as already indicated supra, there is divergence in the approach of the Tribunal and that of the Commissioner (Appeals) in regard to the nature of the disputed items.

8. Accordingly, the appeals are dismissed. There shall be no order as to costs.

Appeals dismissed.