To qualify as Export Duty, it is not necessary that incidence of duty should always be passed on, so as to satisfy economists' principle of Tax - no merit in plea that FOB price be treated as cum-duty price and not transaction value: CESTAT
By TIOL News Service
KOLKATA, APR 20, 2014: THE Appellant, an exporter of ironore 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 AV u/s 14 of the Customs Act, 1962 for determination of export duty.
The Department referred to the Board Circular No. 18/2008 -Cus dated 10.11.2008 and rejected the contention of the Applicant.
Aggrieved by the said assessment Orders, the Appellant had preferred appeals before the Commissioner (Appeals).
As the appeals were rejected the appellant is before the CESTAT.
It is inter alia submitted that they had not received any amount in addition to the FOB price towards the export duty discharged by them and hence FOB price be considered as the cum-duty price and the AV be arrived at.
The Revenue representative submitted that the issue is no more res integra and is covered by the decision of the Mumbai Bench of the Tribunal in the Appellant's own case 2010-TIOL-1906-CESTAT-MUM and 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.
The Bench noted that the period involved in the present case is after 01.01.2009 and the issue of similar nature had cropped up before the Co-ordinate Bench at Mumbai and where it was inter alia held – "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 - nothing contained in Section 4 of the Central Excise Act or Section 67 of the Finance Act, 1994 can be borrowed by the assessing authority in the context of determining the assessable value of the export goods under Section 14 of the Customs Act."
It was, therefore, observed that there was neither any substance in the arguments of 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 instant case.
The second line of argument advanced by the Appellant, which they claimed had not been taken note of by the Mumbai Bench, is that 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.
Observing that it did not find any merit and substance in the said argument in view of the decision of Chhotabhai Jethabhai Patel & Co. vs. UOI & Anr ., 1999 (110) ELT 118 (SC), the Bench held -
"8. …, 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 of 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."
In fine, the appeals were rejected.
In passing: By the way, the date of 1st January, 2009 emanates from the Board Circular 18/2008 , dated 10.11.2008 which states - It has also been decided that with effect from 1 st January, 2009, the practice of computation of export duty shall be changed.
(See 2014-TIOL-597-CESTAT-KOL)
