Commissioner of Customs, Tuticorin Vs. Sterlite Industries India Ltd. & Others [2014-TIOL-1411-HC-MAD-CUS]

In the instant case, the issue was whether demurrage charges and despatch money is required to be included in the assessable value of goods. The Hon’ble Tribunal relied upon a Larger Bench decision in Indian Oil Corporation Vs. CC, Calcutta [2000 (122) ELT 615], wherein it was held that demurrage charges incurred by oil companies is not required to be included in the assessable value of the crude petroleum oil and other petroleum products. The Hon’ble Tribunal referred two Circulars issued by the Central Board of Excise & Customs (the CBEC):

 Circular F. No.467/21/89-Cus.V,      dated August 14, 1991 (“Circular No. 467”), which states that demurrage charges and despatch money may not form a part of the assessable value.

 Circular No.14/2001-Cus, dated March 2, 2001 (“Circular No. 14”), which states that demurrage charges and despatch money are required to be added to the assessable value.

In the instant case, since the transactions related to period prior to March 2, 2001, the Hon’ble Tribunal placing reliance on the Circular No. 467, which was applicable during the relevant period, rejected the order of the Commissioner (Appeals) wherein it was held that demurrage charges and despatch money are required to be added to the assessable value for the period prior to March 2, 2001.

On appeal by the Revenue, the Hon’ble Madras High Court held that since the transactions in the instant case related to a period prior to March 2, 2001, the demurrage charges and despatch money were not includible in the assessable value as Circular No. 467 was prevalent during that time. Accordingly, the Department was not permitted to take a stand contrary to the instructions issued by the CBEC during the relevant period.

(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)

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