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No Customs on barge charges from mother ship to Jetty: SC

AIT News Network

NEW DELHI. Deciding a bunch of Appeals the Apex Court vide a ruling dated 29^th September 2006 has ruled that the charges for transportation of the goods by barges from the mother ship at BFL to the Dharamtar Jetty cannot be added to the valuation of the imported goods for the purpose of levying customs duty.

SC vide a landmark ruling has ruled as under:

“It is not disputed that the freight upto the Dharamtar jetty had been paid by the buyer. Hence we cannot agree that additional transportation charges being the charges for carrying the goods by barges from the mother ship to the Dharamtar Jetty have to be added to the valuation. The fact that the mother ship could not come upto the Dharamtar Jetty is an extraordinary situation (due to lack of draft) and hence any extra transportation charge to meet this situation cannot, in our opinion, be added to the value of the goods.

The bills of lading show that the port of discharge was Mumbai Port/JNPT/Dharamtar. In the bill of entry, the FOB price, freight and insurance were shown separately in U.S. dollars. Since Dharamtar was also shown as the port of discharge, the freight charges paid by the buyer to the shippers included the charges for freight not only upto BFL but also to Dharamtar.

The view we are taking is in accordance with the view expressed in Halsbury's Laws of England, Fourth Edition Vol.43(2) : Shipping and Navigation para 1707 where it is stated :

"1707. Proceeding `so near to port of discharge as ship can safely get'. In practice, the contract usually provides that the ship is to proceed to the port of discharge or so near to it as she can safely get. This provision is intended to benefit the ship owner, and its effect is to substitute another destination to which the ship may proceed. By proceeding to this other destination and delivering the cargo there, the ship owner equally completes the voyage in accordance with the terms of the contract, and is thus entitled to be paid the full freight."

For the reasons given above, this appeal is allowed and the impugned order of the Tribunal as well as of the Customs authorities are set aside, and it is held that the charges for transportation of the goods by barges from the mother ship at BFL to the Dharamtar Jetty cannot be added to the valuation of the imported goods for the purpose of levying customs duty.

Any amount collected by the revenue as duty on barge charges shall be refunded forthwith to the assessee with statutory interest from the date of payment to the date of refund, which must be within three months from today.”

( Click here for full text of landmark ruling AIT-2006-180-SC )