LDT not Relevant Factor to Determine Assessable Value of Goods: CESTAT Quashes Differential Duty Demand [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed differential duty demand and observed that the Light Displacement Tonnage (LDT) not relevant factor to determine assessable value of goods

The appellant, Hussain Sheth Ispat, declared the LDT of the vessel in the Bill of Entry which was assessed provisionally under section 18(1) of the Customs Act, 1962 for want of production of documents i.e. original commercial invoice, bill of sale and Memorandum of Association (MOA).

It appeared that during final assessment of bill of entry, appellant was called upon to submit the original documents, and the appellant submitted notarized commercial invoice, bill of sale etc. The commercial invoice showed LDT 12310 plus an additional 401.323 MT steels plates on the tank top over area of 3432.7 m2. Based on this, the department proceeded to recover the differential duty to the tune of Rs. 14,52,064.

Rahul Gajera, Counsel appearing for the appellant vehemently argued that such an approach is contrary to mandate of section 14(1) of the Act and transaction value need not be disturbed in absence of any allegation or evidence of extra consideration having been paid to the seller over and above the declared value. It was further pointed out that LDT based assessment is incorrect when the contract price agreed between the parties is lump sum and in respect of the whole of the vessel and not in proportion to the LDT of the vessel.

On the other hand, Sanjay Kumar, Superintendent (Authorised Representative) appearing for the revenue submitted that once higher LDT is found as per the import documents duty in proportion thereto is required to be paid by the importer and further reiterated the findings of the impugned order.

A Two-Member Bench of the Tribunal comprising observed that “It is observed that parties have agreed upon a lump sum price of USD 5,815,747 for the ship as a whole and absent any allegation or evidence of extra consideration having been made by the importer over and above the said price, transaction value as declared by the importer has to be accepted. Lower authorities clearly erred in loading the assessable value entirely based on the LDT when the LDT is irrelevant for assessment of duty.”

To Read the full text of the Order CLICK HERE

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