Case Law Details
Terapanth Foods Ltd. Vs Commissioner of Customs Vijayawada (CESTAT Hyderabad)
Introduction: The case of Terapanth Foods Ltd. vs. Commissioner of Customs Vijayawada was a significant legal battle adjudicated by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in Hyderabad. The core issue revolved around the valuation of export goods, specifically iron ore fines, and the penalties imposed for alleged under-valuation and mis-declaration. This article delves into the intricate details of the case, the arguments presented by both sides, and the final ruling by CESTAT.
Background and Context: Terapanth Foods Ltd. and its director, Shri Babulal Singhvi, appealed against the Order-in-Original dated August 28, 2015, issued by the Commissioner of Customs (Preventive), Vijayawada. The appeals challenged the show cause notice and subsequent penalties imposed for under-valuation of iron ore fines exported under Shipping Bill No. 312/10-11. The crux of the dispute was the classification and valuation of iron ore fines exported to M/s Swiss Singapore Overseas Enterprises Pvt. Ltd., Singapore. The contract stipulated a price of $114 per Dry Metric Tonne (DMT) on a Cost and Freight (CFR) basis to China. The Customs department alleged that the actual transaction value was $130 per DMT, not $114 as declared, resulting in a significant underpayment of export duty.
Arguments by Terapanth Foods Ltd.
1. Transaction Value and FOB Basis: Terapanth Foods Ltd. contended that the declared transaction value of $114 per DMT was the true price paid by the buyer, as evidenced by the contractual agreement and final commercial invoice. They argued that any adjustments in the price were within the contractual terms due to quality and moisture content variations certified by the CIQ at the discharge port in China.
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