TIOL-DDT 2678
04 09 2015
Friday

THE Supreme Court delivered a landmark judgement day before yesterday. We reported the CESTAT Order in this case on 17.03.2006 as Shortage in quantity of imported goods - quantity is not relevant for valuation - oil companies in for a shock - Revenue wins huge case in Tribunal.

After nearly a decade, it is now the Revenue that is in for a shock and the huge win is for the Oil Companies!

In respect of liquid bulk cargo, the quantity of goods imported is equivalent to the quantity received in shore tank. The ocean loss is proportionately shared by all the refineries concerned. The point at issue is the valuation of the crude imported. According to Revenue, irrespective of the quantity of crude received in the shore tanks, they have to pay duty on the basis of the amount paid. On the other hand, the Oil Companies contend that duty is payable only on the value of the crude received in the shore tanks. In other words, the Oil Companies want to pay duty only on the actual quantity received in the shore tanks despite the fact that they had to make payment on the basis of the quantity shown in the Bill of Lading.

On 24th July, 2002, the Commissioner of Customs passed a detailed order in which he held that since the basis of customs duty had changed into an ad valorem regime, "transaction value" would necessarily mean the value at which the goods were to be purchased from the foreign supplier. According to the Commissioner, full payment for the goods has to be made by the importer only on the basis of the quantity mentioned in the bill of lading. This being the case, therefore the "transaction value" of the said goods would only be as per the payment made of the amounts stated in the bill of lading and not the quantity received ultimately in the shore tanks at ports in India.

The Tribunal agreed with the Commissioner.

Now, the Supreme Court has held that each one of the reasons given by the Tribunal is incorrect in law as:

1. It lost sight of the fact that a levy in the context of import duty can only be on imported goods, that is, on goods brought into India from a place outside of India. Till that is done, there is no charge to tax.

2. The taxable event in the case of imported goods, is "import". The taxable event in the case of a purchase tax is the purchase of goods. The quantity of goods stated in a bill of lading would perhaps reflect the quantity of goods in the purchase transaction between the parties, but would not reflect the quantity of goods at the time and place of importation. A bill of lading quantity therefore could only be validly looked at in the case of a purchase tax but not in the case of an import duty.

3. Sections 13 and 23 of the Customs Act have been wholly lost sight of. Where goods which are imported are lost, pilfered or destroyed, no import duty is leviable thereon until they are out of customs and come into the hands of the importer. It is clear therefore that it is only at this stage that the quantity of the goods imported is to be looked at for the purposes of valuation.

4. The basis of the judgment of the Tribunal is on a complete misreading of Section 14 of the Customs Act. First and foremost, the said Section is a section which affords the measure for the levy of customs duty which is to be found in Section 12 of the said Act. Even when the measure talks of value of imported goods, it does so at the time and place of importation, which again is lost sight of by the Tribunal.

5. "Transaction value" which occurs in the Customs Valuation Rules has to be read under Rules 4 and 9 as reflecting the statutory position, namely, that valuation of imported goods is only at the time and place of importation.

6. The Tribunal's reasoning that somehow when customs duty is ad valorem the basis for arriving at the quantity of goods imported changes, is wholly unsustainable. Whether customs duty is at a specific rate or is ad valorem makes not the least difference to the statutory scheme. Customs duty whether at a specific rate or ad valorem is not leviable on goods that are pilfered, lost or destroyed until a bill of entry for home consumption is made or an order to warehouse the goods is made. This is for the reason that the import is not complete until what has been stated above has happened.

We bring you this case today. Please see Breaking News

The Government shall speak only in one voice. It has only one policy: SC

THIS is a not so strange case where one department of the Government gave a concession which another department sought to deny on hyper technical grounds.

The Government of Himachal Pradesh had as a part of Industrial Policy allowed a concessional rate of 1% of Central Sales Tax till 31.03.2009. The State Cabinet met on 20.05.2009 and approved extension of the concession till 31.03.2013. Accordingly the Principal Secretary (Industry) issued a notification that the the Governor, Himachal Pradesh is pleased to extend the incentive of validity of concessional rate of CST @ 1% upto 31.03.2013 or till the time CST is phased out, whichever is earlier.

Thereafter, the Excise and Taxation Department of the State Government issued statutory Notification allowing the tax at the rate of 1% of the taxable turnover of such goods with immediate effect for the period ending 31.03.2013. This Notification was issued on 18.06.2009. So, technically there was no concessional tax during the period from 01.04.2009 to 17.06.2009.

The State had the audacity to argue that since the notification under the Act providing for tax concession was issued only on 18.06.2009 wherein it was specifically mentioned that the notification would have immediate effect and would operate for the period ending on 31.03.2013, the assessee is not entitled to the CST concession @ 1% for the intervening period between 01.04.2009 to 18.06.2009.

The Supreme Court yesterday held:

1. The State Government cannot speak in two voice.

2. Once the Cabinet takes a policy decision to extend its 2004 Industrial Policy in the matter of CST concession to the eligible units beyond 31.03.2009, upto 31.03.2013, and the Notification dated 29.05.2009, accordingly, having been issued by the Department concerned, viz., Department of Industries, thereafter, the Excise and Taxation Department cannot take a different stand.

3. What is given by the right hand cannot be taken by the left hand.

4. The Government shall speak only in one voice. It has only one policy. The departments are to implement the Government policy and not their own policy.

5. Once the Council of Ministers has taken a decision to extend the 2004 Industrial Policy and extend tax concession beyond 31.03.2009, merely because the Excise and Taxation Department took some time to issue the notification, it cannot be held that the eligible units are not entitled to the concession till the Department issued the notification.

6. The State Government cannot levy the tax against its own policy.

7. The State Government is bound by the policy decision taken by the Council of Ministers and duly notified by the Department concerned, viz., Department of Industries.

We bring you this case today. Please see Breaking News

Customs - CBEC Prescribes More Ease of Doing Business - No Piece meal queries

CBEC Notes:

1. Trade facilitation has been accorded priority by the Government since it is critical for Ease of Doing Business in India. The progress in Ease of Doing Business is being monitored at the highest level.

2. In order to facilitate genuine trade and to reduce dwell time, it is necessary to streamline the procedures at every stage of assessment till out of charge of goods is given by Proper Officer of Customs.

3. Increasing number of queries and resultant delay in assessment process is a matter of concern.

4. Further, instances have come to notice that in cases, during re-assessment of Bill of Entry by the proper officer, the queries seeking clarification from importer are raised in a piece meal manner.

5. There is also no mechanism to monitor the time taken in raising queries and completing re-assessment by the officers.

6. The C&AG in its report on Trade Facilitation of Import and Export through Ports has highlighted this point and desired that a system of periodical review and analysis of queries raised must be devised by the Department.

7. Further, the areas where maximum number of queries are raised should be identified which could be disseminated for the benefit of trade so that they could take preventive action.

Board decides and desires that:

1. genuine clarification sought by officers from importers/exporters are raised in one go and not in a piece meal manner.

2. field formation could consider listing of the queries frequently raised in course of assessment and disseminate them through Public Notice or sensitize trade about the same so that importers could take preventive action to avoid such queries or be better prepared to reply to such queries.

3. the time taken after answering the queries should be further curtailed and in fact documents that are delayed are accorded priority after receipt of satisfactory reply from importers.

Board directs that:

1. All Chief Commissioners to instruct officers under their jurisdiction to strictly adhere to aforementioned guidelines.

2. Commissioner of Customs may also devise a mechanism for monthly update/review of the same. The review must include type and frequency of queries raised by the proper officers.

3. Chief Commissioners should also consider suitable sensitization of importers about most common errors so that avoidable delays in completion of reassessment by proper officer may be avoided in future.

CBEC Circular No. 22/2015-Customs., Dated: September 03, 2015

Customs - Commissioner drops DRI Case, CESTAT with DRI, Supreme Court sustains Commissioner's Order

IN a rare show of judicial spine, a Commissioner dropped a demand raised by DRI. Such judicial independent thinking is not normally tolerated in the Department which took the matter in appeal to the CESTAT. CESTAT surprisingly allowed the Revenue Appeal.

The CESTAT had observed, "Instead of appreciating the evidence unearthed by the investigating officer with reference to the goods imported, the adjudicating authority has embarked himself on a detour deviating from the main issue".

The Supreme Court observed, “We are at loss to understand what is meant by this statement."

The Court further observed, “the CESTAT does not seem to have come to grips with the real issue at all."

The Supreme Court set aside the order of the Tribunal and restored the order of the Commissioner. The Commissioner passed his order on 1st March, 2001 and his decision is given the stamp of approval by the apex court 14 years later.

We bring you this case today. Please see Breaking News

Customs - New Exchange Rates from Today

CBEC has notified new exchange rates for Imported Goods and for Export Goods with effect from 4th September 2015. The USD is at a high of 66.85 rupees for imports and 65.80 rupees for exports.

Notification No. 84/2015-Customs (NT), Dated: September 03, 2015

Black Money FAQ

CBDT has issued another clarificatory circular on the applicability of various provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act 2015.

CBDT Circular No. 15/2015., Dated September 03, 2015

Until Monday with more DDT

Have a nice weekend.

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