M/S. Sesa Goa Ltd vs Commissioner Of Central Excise, ...

(ARISING OUT OF ORDER-IN-APPEAL NO.40-56/CUS/BBSR-I/2010 DATED 05.10.2010 PASSED BY COMMISSIONER (APPEALS), CENTRAL EXCISE, CUSTOMS & SERVICE TAX, BHUBANESWAR)

FOR APPROVAL AND SIGNATURES OF

DR. D.M.MISRA, HONBLE JUDICIAL MEMBER DR. I.P.LAL, HONBLE TECHNICAL MEMBER

1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not ?

3. Whether Their Lordships wish to see the fair copy : of the Order? 4. Whether Order is to be circulated to the Departmental : Authorities ?

M/S. SESA GOA LTD.

 APPELLANT VERSUS

COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, BHUBANESWAR-I ...RESPONDENT

APPEARANCE:

SHRI MUKESH LADDA, FCA ASSISTED BY SHRI AYUSH KHANDELIA,CA FOR THE APPELLANT.

SHRI A.K.DAS, SPECIAL COUNSEL FOR THE REVENUE.

CORAM:

DR. D.M.MISRA, HONBLE JUDICIAL MEMBER DR. I.P.LAL, HONBLE TECHNICAL MEMBER

Date of Hearing & Decision:22.01.2015

ORDER NO.FO/A/75109-75124/2015

Per Dr. D.M.Misra

These sixteen Appeals are filed against the Order-in-Appeal No.40-56/CUS/BBSR-I/2010 dated 05.10.2010 passed by Commissioner (Appeals), Central Excise, Customs & Service Tax, Bhubaneswar, whereunder sixteen Orders-in-Original had been disposed.

2. Briefly stated facts of the case are that the Appellant are exporters of Iron Ore Fines. Export duty, on ad-valorem basis had been imposed on the Iron Ore Fines. The Appellant filed seventeen shipping bills during the relevant period . At the time of export of the said Iron Ore Fines, the assessment was made provisional and the Appellant had directed to discharge duty, considering the FOB value as transaction value instead of cum-duty price, and they had discharged duty accordingly, under protest. On finalization of the assessment, the Ld. Adjudicating authority had issued Orders-in-Original, considering the FOB value as cum-duty price. Consequently, the Appellants had filed refund claims of the excess duty paid. The Deputy Commissioner of Customs, Paradeep, after being satisfied that incidence of duty had not been passed on, sanctioned the refund in respect of fifteen shipping bills, and the Appellant were handed over cheques against eleven shipping bills out of fifteen and the cheques for the balance four shipping bills were withheld by the Department, on the ground that review applications against the Assessment Orders were filed before the Ld. Commissioner (Appeals). After hearing both sides the Ld. Commissioner (Appeals) had allowed the Revenues appeals by setting aside the Orders of Adjudicating Authority. Aggrieved by the said Order, the Assessee-Appellant are in appeal before this forum.

3. Ld. CA, Shri Mukesh Ladda appearing for the Appellant submitted that in the Boards Circular No.18/2008-Cus dated 10.11.2008 issued under F.No.467/45/2008-Cus.V, it has been clarified that up to 31.12.2008, computation of export duty and cesses be carried out by taking FOB price as cum-duty price. It is his submission that even though, the said Circular was challenged by the Appellant before the Mumbai Bench in their own case, but the Honble Tribunal has observed that the said Circular is binding on the departmental authorities. Hence, the assessment of Iron ore Fines for export till 31.03.2008 be carried out as per the said Circular.

4. Per contra, the ld. Special Counsel, Shri A.K.Das for the Revenue has fairly accepted that the said Circular was issued to bring uniformity in the assessment practice of export duty, followed by different Customs Houses spread over the country.

5. Heard both sides and perused the records. There is no dispute that the present export of iron ore fines against seventeen bills of entry relate to the period prior to 01.01.2009, that is, after the export duty of iron fines was levied on ad-valorem basis from 13.06.2008. Consequently, the Circular bearing No.18/2008-Cus. dated 10.11.2008, was issued by the Board, clarifying the method of assessment to be adopted for computation of export value under Section 14 of the Customs Act, 1962, in relation to levy of export duty. The said Circular reads as follows:-

Circular No. 18/2008-Cus., dated 10-11-2008

F.No. 467/45/2008-CusV

Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject :Computation of Value under Section 14 for Levy of Export Duty.

1.?After the imposition of export duty on steel at ad valorem rates in May 2008, a doubt has been raised regarding the manner of calculation of export duty, particularly in view of the introduction of transaction value concept under Section 14 as part of the 2007 budgetary exercise. Specifically, the doubt is whether the export duty should be charged simply as a percentage of FOB price or whether the FOB price should be taken as the cum-duty price for determination of assessable value and duty due thereon.

2.?Hitherto, the export duty and cesses were calculated by taking the FOB price declared by the exporter as the cum-duty price and working backwards from the FOB price. This methodology is based on instructions issued by the Board (contained in Appraising Manual) in 1966. This view was reconfirmed by the Board in 2000 while developing the software for Indian Customs EDI System (ICES-Exports) for the purpose of levy of cess under various enactments of different Ministries.

3.?The matter has been examined in consultation with the Ministry of Law who have opined that Section 14 of the Customs Act or the rules framed thereunder, do not specify any procedure for calculation of assessable value for the purpose of charging export duty in a situation where the exporter has not collected any amount in excess of what has been declared in the shipping bill/invoice. As per practice in vogue for the last more than four decades, transaction value of export goods has invariably been taken as cum-duty price. This practice is not in conflict with any of the statutory provisions. Amendments made in Section 14 of the Customs Act by the Finance Act, 2007 have also not brought any change in the procedure for calculation of assessable value for the purpose of charging export duty. However, any decision on this issue is essentially a matter of policy on which decision is to be taken by the administrative department.

4.?In view of the above, a policy decision has been taken that till 31-12-2008, the existing practice of computation of export duty and cesses by taking the FOB price as the cum-duty price may be continued. All pending cases may be finalized accordingly.

5.?It has also been decided that with effect from 1st January, 2009, the practice of computation of export duty shall be changed. It is proposed that for the purposes of calculation of export duty, the transaction value, that is to say the price actually paid or payable for the goods for delivery at the time and place of exportation under Section 14 of Customs Act, 1962, shall be the FOB price of such goods at the time and place of exportation. For example if the transaction is at Rs. 100 FOB, and the duty is 15%, the export duty will be 15% of FOB price, that is Rs. 15. In case the transaction is on CIF basis, the FOB price may be deduced from the CIF value, and then the export duty be calculated as 15% of such FOB price.

6.?Any difficulties which are anticipated in the implementation of the change in computation of export duty from 1st January, 2009 may be brought to the notice of the Board by 20th November, 2008 positively.

7.?The contents of this Circular may be brought to the notice of the field formations and the Trade under your jurisdiction.

8.?Hindi version follows.

6. On a careful reading of the said Circular, in particular, Paras 3 & 4 of the said Circular, it is clear that the Board has taken a policy decision on the assessment of export duty till 31.12.2008. It is stated that the existing method of assessment of computation of export duty and cesses would be continued, that is, by adopting the FOB price as the cum-duty price, till 31.12.2008. We do not find force in the observation of the ld. Commissioner (Appeals) that the said practice of assessment relates to those Customs Houses only, where the practice of export-levy was adopted by considering the FOB price as the cum-duty price, and cannot be extended to other places. On the other hand, the very purpose of issuing the said Circular is to bring uniformity to the divergent assessment practice followed in the collection of Customs Export Duty across the country. Also, we find that after a detailed discussion on the relevancy and applicability of the said Circular, the Co-ordinate Bench at Mumbai in the Appellants own case reported as Sesa Goa Ltd. vs. CCE, C. & ST, 2012(277)ELT 105(Tri-Mum.), observed at para 11 as follows:-

11.?Both sides have also extensively referred to the Boards circular. They agree that this circular was issued under Section 151A of the Customs Act, which provision authorises the Board to issue orders, instructions or directions for the sake of uniformity in classification of goods under the Customs Tariff Act or with respect to levy of duty on such goods, and such orders, instructions, and directions are binding on the subordinate authorities in the department. The proviso to the above section says that the Board shall not, under the above section, instruct any assessing authority to assess the goods in a particular way in a particular case. Any instructions issued to the contra will not bind such assessing authority or the first appellate authority. This is what we understand from the proviso, which does not say that the orders/instructions/directions issued by the Board under Section 151A of the Act are not binding on the assessing authorities or appellate Commissioners. The circular in question is certainly binding on quasi-judicial authorities under the Board, who may be called upon to decide on identical issues. In this connection, we have perused the Apex Courts judgment in Varsha Plastics (supra) case cited by the counsel. In this judgment, we have not seen any ruling which supports the argument advanced by the learned counsel in relation to the Boards circular.

7. Needless to mention, the Circular is binding on the Department in view of the principle laid down by the Honble Supreme Court in the case of Collector of C.Ex. Vs. Dhiren Chemicals 2002(139) ELT 3(SC).

8. In view of the above, we do not see merit in the impugned Order-in-Appeal. Consequently, the same is set aside and the Appeals filed by the Appellant are hereby allowed with consequential relief, if any, as per law.

(Operative part of the Order was pronounced in the court)

SD/-09.03.2015 SD/-27.02.2015 (I.P.LAL) (D.M.MISRA) TECHNICAL MEMBER JUDICIAL MEMBER

DUTTA/

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