COMMISSIONER OF CUSTOMS, CALCUTTA ETC. ETC. versus M/S. INDIAN OIL CORPORATION LTD. AND ANR.

Citation: [2004] 2 S.C.R. 511 · Decided: 17-02-2004 · Supreme Court of India · Bench: RUMA PAL · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

COMMISSIONER OF CUSTOMS, CALCUTTA ETC. ETC. 
A 
v. 
MIS. INDIAN OIL CORPORATION LTD. AND ANR. 
FEBRUARY 17, 2004 
[RUMA PAL AND P. VENKATARAMA REDD!, JJ.] 
Customs J!.ct, 1962-Sections 46 and 151-A/Circular dated 14.8.1991 
issued by the Central Board of Excise & Customs: 
Import of petroleum products and Crude Oil by the assessee-Clearance 
of goods upon payment. of customs duty thereto-Show cause notice on grounds 
of misdeclaring value of the goods and suppressing the facts regarding payment 
of demurrage charges-Revenue confirming extra duty after adding demurrage 
charges in the value of the goods-Appeals rejected by the Appellate Authority--
B 
c 
On appeal, Tribunal held that in view of the Circular issued by the CBEC D 
demurrage charges not includible in the customs value of the imported goods-
On appeal, held, the Circular stipulates exclusion of demurrage from the 
assessable value of the goods-Affirmed by the Constitution Bench in an 
earlier case-It, therefore, remains a good law so long as Circular remains 
operative-Hence, demurrage wrongly included in the assessable value of the E 
goods-Customs Valuation (Determination of Price of Imported Goods) Rules 
I998; Rules 5-9--Constitution of India, 1950-Article 141. 
Provisions of law under Section 151 A of the Customs Act, vis-a-vis 
Section 1 I9 of the Income Tax Act and Section 37 of the Central Excise Act-
Ana/ogy between-Held: Parliament had legislatively approved the same F 
construction as under the provisions in the Income Tax Act and the Central 
Excise Act-The same provision OJsing same words introduced in the Customs 
Act-Principle enunciated in earlier Acts should be determinative of the 
construction in respect of materially similar statutory provisions in the later 
Act-Hence, the Circular is binding on the Revenue-Interpretation of 
Statutes-Income Tax Act, 1961; Section I 19--Central Excise Act; Section G 
37B. 
Respondent-assessee, an Oil Corporation, imported various 
petroleum products and cleared them upon payment of customs duty 
without any protest by the Customs authorities. Later, the Revenue had 
511 
H 
512 
SUPREME COURT REPORTS 
[2004] 2 S.C.R. 
A issued a show cause notice to the assessee alleging that they had wilfully 
misdeclared the value of the g<!ods by deliberately suppressing the facts 
that the demurrage charges had actually been paid to the ship owners; 
and that since the payment for the demurrage charges had been made 
through the negotiating bank, the demurrage charges along with bank 
B charges, both were includible in the value of the goods. Revenue demanded 
extra customs duty and later confirmed the demand, and also levied 
penalty. Assessee filed an appeal before the authority concerned, which 
was rejected. However, the appeal to the Tribunal was allowed on the 
ground that the Circular issued by the Central Board of Excise and 
Customs declaring that demurrage not includible in the value of the goods 
C imported was binding on the Revenue; that the payment of demurrage 
charges was not an incident of sale; and that it was not an extraordinary 
expenditure, thus could not be includible in the assessable value of goods. 
Hence the present appeal by the Revenue. 
It was contended for the Revenue that the demurrage was a 
D component of the cost of freight and the authority concerned had accepted 
the transaction value of the goods imported, which was inclusive of cost, 
insurance and freight; that demurrage was not an extraordinary payment; 
that since the Valuation Rules incorporated the GATT valuation 
principles, demurrage could be considered as part of the cost of transport; 
and that the Circular was not binding as withdrawn later on. 
E 
On behalf of the Respondent-assessee, it was submitted that the 
Circular issued as per provisions of the Customs Act was in pari materia 
with Section 378 of the Central Excise Act; and that the Circular was 
binding on Revenue; that the assessable value of the goods is the ordinary 
sale price at the price of importation; and that the demurrage did not form 
F part of the sale. 
Dismissing the appeals, the Court 
HELD: Per Ruma Pal, J.: 
1.1. Materially identical provisions are contained in Section 119 of 
G the Income Tax Act and Section 378 of the Central Excise Act. This Court 
has, in a series of decisions, held that Circulars issued under Section 119 
of the Income Tax Act, 1961 and 378 of the Central Excise Act are binding 
on the Revenue. (519-E-F) 
Collector of 

Excerpt shown. Read the full judgment & AI analysis in Lexace.