Page 209 - ELT_15th May 2020_VOL 372_Part 4th

2020 ] COMMR. OF CUS. (AIRPORT & ADMN.), KOLKATA v. JET AIRWAYS (INDIA) LTD. 599

(Appeals) in aforementioned Order is sub judice and has not attained
finality as yet.
5. Ld. A. R. reiterated the grounds submitted by the Revenue.
6. Heard both sides and perused the appeal records.
7. The main point of dispute is the valuation of leftover ATF available
in the fuel tank of aircraft landing in India from an international trip. The duty
liability on such ATF is not under dispute. However, its valuation, more specifi-
cally, addition of freight element on notional basis to arrive at the value of such
ATF is in dispute. The Original Authority held that the remanant ATF is trans-
ported by the aircraft and as such, the actual freight is not ascertainable, a no-
tional freight in terms of Rule 10(2) is to be added to arrive at the assessable val-
ue of ATF. We note that the aircraft requires ATF for its propulsion. As per the
Civil Aviation Regulation requirements and also for safety, aircraft caries ade-
quate amount of fuel in its flight. The consumption of fuel depends on various
factors. Factually when the aircraft completes the inward journey to reach the
Indian Airport, certain quantity of fuel is left in the tanks. We are not in agree-
ment that there should be a freight element attributable to such fuel in the tank.
In other words, the aircraft did not transport the fuel as a cargo or goods for the
purpose of freight. Such interpretation will be a result of hyper-technical ap-
proach to the facts of the case. Admittedly, the remanant fuel is construed to be
an imported item for the purpose of Customs duty. In the importation of such
remanant fuel, we could not discern any separate freight element, which can be
added in the assessable value. The fuel in the tank is part of aircraft in operation.
Fuel cost is calculated, and apparently, forms part of commercial consideration
while fixing ticket charges for transporting aircraft. No freight element is at-
tributable to fuel in the tank, the usage of which varies on different parameters.
In other words, the aircraft did not transport ATF on which a freight element can
be attributed. The plain meaning “Freight” is goods that are transported by
ships, planes, trains or lorries/trucks; the system of transporting goods in this
way (OXFORD Advanced Learners Dictionary 7th ed.). We note that on this ba-
sis it cannot be said that fuel in the tank of aircraft used for propulsion can be
considered as cargo/goods with attributable cost of freight. Further, we note that
Rule 10(2) was applied by the lower authority on the ground that the freight of
ATF is not ascertainable. We note that there is no freight element involved and
hence, there is no application for Rule 10(2).
We find that the Hon’ble Supreme Court in Wipro Ltd., (2015) 14 SCC 161
= 2015-TIOL-79-SC-CUS = 2015 (319) E.L.T. 177 (S.C.), held that normally, the
value of imported goods has to be the transactional value which means the price
“actually paid” or “payable” for the goods imported. When the value of transac-
tion could not be determined then the Rules are applied to arrive at the value.
The endeavour is to have closest proximity with the actual price. Dealing with
addition of loading and handing charges at 1% on notional basis as per Rule 9 of
Valuation Rules, the Apex Court held that when the actual costs towards
handling charges are available, notional addition is not legally tenable. It was
held to be violative of Article 14 of the Constitution. In the present case, there is
no freight involved with reference to leftover fuel in the tank of an operating air-
craft. Hence, there is no question of such freight being “not ascertainable” and
hence addition of 20% notional freight.
8. In view of their observation, we find there is no justifiable reason to
EXCISE LAW TIMES  15th May 2020  209