1999 JTR(SC) 1508
2000 AIR(SC) 606 ; 2000 AIR(SCW) 33 ; 2000 115 ELT 7 ; 1999 10 JT 7 ; 1999 7 Scale 500 ; 2000 1 SCC 448 ; 1999 Supp5 SCR 329 ; 2000 KHC 901 ; 1999 10 Supreme 241
1999(10) Supreme 241
SUPREME COURT OF INDIA
(From Central Excise, Customs and Gold (Control) Appellate Tribunal, New Delhi)
S.P. Bharucha and R.C. Lahoti, JJ.
M/s. Coromandal Fertilisers Ltd. -Appellant
versus
Collector of Customs -Respondent
Civil Appeal Nos. 2233-42 of 1988
With
Civil Appeal No. 4307 of 1996
Decided on 14-12-1999
Counsel for the Parties :
For the Appellant : S. Ganesh, Ravinder Narain, Janesh Baweja, S. Sukumaran, Advocates for M/s. JBD & Co., Advocates.
For the Respondent : N.K. Bajpai, Hemant Sharma and P. Parmeshwaran, Advocates.
IMPORTANT POINT
Once the customs authorities, for the purpose of assessment of customs duty, assessed landing charges at a percentage of the CIF value of imported goods, they cannot also add to their value stevedoring charges.
Act
Referred
:CUSTOMS ACT : S.14
MAJOR PORT TRUSTS ACT : S.42
(A) The Major Ports Trusts Act, 1963 (S.42) and the Customs Act govern the assessment of Customs duty and landing charges in this matter. The Customs authorities assessed landing charges at 1.4 per cent of the CIF value of imported fertilizers and sought to additionally add stevedoring charges for unloading, which the appellants argued were already subsumed. The Tribunal and this Court examined whether unloading charges over and above the landed value percentage could be levied when the port authoritys statutory responsibilities under the Major Ports Trusts Act did not encompass the unloading services the appellants themselves arranged and executed through their own wharf, equipment, and staff.
(B) Landing charges must reflect the actual cost of bringing goods to land and, when assessed as a percentage, are deemed to cover the full gamut of landing expenses. If the authorities opt for a percentage assessment, it is conclusive and precludes a further addition for itemised services such as stevedoring. The onus on the Customs authorities is to prove that the percentage does not represent the true landed cost when such additions are challenged.
Facts of the case:
The appellants imported rock phosphate and sulphur on chartered ships during 19711975, purchased on the high seas, and discharged at Visakhapatnam using their own wharf, equipment, and staff. The Customs assessed landing charges at 1.4 per cent of the CIF value and then added stevedoring charges ranging from Rs. 5.86 to Rs. 9.42 per metric ton for unloading, which the appellants contested as being already inclusive.
Findings of Court:
The 1.4 per cent landing charges represented the total expenditure incurred to bring the goods to land. Once such a percentage-based assessment is accepted, it covers all aspects of landing charges, and the authorities cannot add separate sums for unloading or stevedoring on that basis. The appellants contention that the additional charges were not warranted was accepted.
Issues:
Whether stevedoring or unloading charges can be added to the value of goods when landing charges have already been assessed at a percentage of the CIF value, and whether the actuarial determination of actual landing charges is necessary in every case.
Ratio Decidendi:
A percentage-based assessment of landing charges under the Customs regime is comprehensive; any further addition for unloading or stevedoring services is impermissible as it would amount to double counting and a failure to accept the conclusiveness of the percentage assessment.
Result:
The civil appeals are allowed, the impugned order is set aside, and the respondents must pay the appellants the costs of the appeals.
(A) The Major Ports Trusts Act, 1963 (S.42) and the Customs Act govern the assessment of Customs duty and landing charges in this matter. The Customs authorities assessed landing charges at 1.4 per cent of the CIF value of imported fertilizers and sought to additionally add stevedoring charges for unloading, which the appellants argued were already subsumed. The Tribunal and this Court examined whether unloading charges over and above the landed value percentage could be levied when the port authoritys statutory responsibilities under the Major Ports Trusts Act did not encompass the unloading services the appellants themselves arranged and executed through their own wharf, equipment, and staff.
(B) Landing charges must reflect the actual cost of bringing goods to land and, when assessed as a percentage, are deemed to cover the full gamut of landing expenses. If the authorities opt for a percentage assessment, it is conclusive and precludes a further addition for itemised services such as stevedoring. The onus on the Customs authorities is to prove that the percentage does not represent the true landed cost when such additions are challenged.
Facts of the case:
The appellants imported rock phosphate and sulphur on chartered ships during 19711975, purchased on the high seas, and discharged at Visakhapatnam using their own wharf, equipment, and staff. The Customs assessed landing charges at 1.4 per cent of the CIF value and then added stevedoring charges ranging from Rs. 5.86 to Rs. 9.42 per metric ton for unloading, which the appellants contested as being already inclusive.
Findings of Court:
The 1.4 per cent landing charges represented the total expenditure incurred to bring the goods to land. Once such a percentage-based assessment is accepted, it covers all aspects of landing charges, and the authorities cannot add separate sums for unloading or stevedoring on that basis. The appellants contention that the additional charges were not warranted was accepted.
Issues:
Whether stevedoring or unloading charges can be added to the value of goods when landing charges have already been assessed at a percentage of the CIF value, and whether the actuarial determination of actual landing charges is necessary in every case.
Ratio Decidendi:
A percentage-based assessment of landing charges under the Customs regime is comprehensive; any further addition for unloading or stevedoring services is impermissible as it would amount to double counting and a failure to accept the conclusiveness of the percentage assessment.
Result:
The civil appeals are allowed, the impugned order is set aside, and the respondents must pay the appellants the costs of the appeals.
ORDER
A brief question arises in these appeals, namely, having for the purposes of assesment of Customs duty, assessed landing charges at the rate of 1.4 per cent of the CIF value of imported goods, can the Customs authorities also add to their value stevedoring charges.
2. The appellants manufacture fertilizers. For this purpose they imported large quantities of rock phosphate and sulphur. The said goods were brought to India in chartered ships arranged by the M.M.T.C., the canalising agency at the relevant time, namely, 1971 to 1975. The said goods were purchased by the appellants on the high seas. The responsibility of unloading the said goods in India was theirs. For the purpose of efficient unloading, the appellants maintained their own wharf at Visakhapatnam, unloading equipment and staff for the same.
3. Landing charges of the said goods were assessed at 1.4 per cent of the CIF value thereof. The Assistant Collector said that the 1.4 per cent landing charges did not include stevedoring charges and he added them separately, calculating them upon the basis of, inter alia, unloading labour charges, Customs staff overtime, port hire charges for dinning hall, fuel, electricity, depreciation, approximate maintenance cost, administrative overheads and notional interest on capital. He found that the stevedoring charges ranged between Rs. 5.86 to Rs. 9. 42 per metric tonne of the said goods.
4. The appellants succeeded before the Appellate Collector, who took the view that landing charges and stevedoring or unloading charges were one and the same. The Customs authorities challenged the correctness of his order before the Customs, Excise and Gold (Control) Appellate Tribunal and it is the order of the Tribunal which is now in question before us. According to the Tribunal, the 1.4 per cent landing charges already added to the value of the said goods comprised wharfage charges and conveyance charges from the wharf to the transit sheds but not the unloading charges from ship to berth. The unloading charges had, therefore, in its view, to be computed and added on and they could only be computed, as had been done by the Assistant Collector, but with some marginal difference.
5. We asked Mr. Bajpai, learned counsel for the Customs authorities, repeatedly how stevedoring or unloading charges could be added on to the value of goods when the Customs authorities had already loaded the value of goods when the Customs authorities had already loaded the value of goods with landing charges at the rate of 1.4 per cent of their CIF value. We do not think that we have received any satisfactory answer to the question at the conclusion of the hearing.
6. Mr. Bajpai referred to Section 42 of the Major Port Trusts Act, 1963 and submitted, quite rightly, that the Board of Trustees of a major port furnish a variety of services, including receiving, removing, shifting, transporting, storing and delivering goods brought within their premises. In his submission, in this particular case, the 1.4 per cent landing charges did not include charges for unloading the said goods. Unloading the said goods had been done by the appellants themselves at the Wharf that they had hired, using their own equipment and their own staff. Therefore, the charges on this account, called stevedoring charges, had to be added, irrespective of the fact that 1.4 per cent landing charges had already been added. Mr. Bajpai further submitted that the Customs authorities would be in great difficulty if in each case the actual landing charges had to be ascertained and charged.
7. "Landing charges" are exactly what the words mean, the expenditure incurred by an importer for bringing goods on board ship to land. Landing charges, in law, must be assessed on actuals, but, as a matter of practice, particularly to facilitate expeditious clearance, landing charges are assessed at a percentage of the value of the goods and such assessment is accepted. When so assessed, landing charges cover the totality of all an importer expends to bring imported goods of land.
8. In the present case, the Customs authorities assessed the landing charges that the appellants incurred at 1.4 per cent of the CIF value of the goods. There is no objection by the appellants to this. It is not their case that such percentage exceeds the costs in this behalf that they have actually incurred and that they should get a refund. What they do contend is that the 1.4 per cent landing charges represent all that they have had to expend to bring the said goods to land and therefore, no addition of stevedoring or unloading charges can be made.
9. In our view, the submission made on behalf of the appellants is unexceptionable. It is open to the Customs authorities not to assess landing charges at a percentage and to assess them at actuals. But if they do assess them on a percentage basis, they cover thereby all aspects of landing charges and it is not open to them then to seek to add any amount thereto on the basis that this or that or the other was not covered thereby.
10. In the result, the civil appeals are allowed. The order under challenge is set aside. The respondents shall pay to the appellants the costs of the appeals.
(C.R.) Appeals allowed.
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Parallel Citations of other Journals :
Coromandal Fertilisers v. Collector of Customs, 1999(10) Supreme 241
00036
00037