Page 198 - ELT_15th August 2020_Vol 373_Part 4

532 EXCISE LAW TIMES [ Vol. 373

mentioning therein that the Government of India was also paying Rs. 17/- per
MT as service charges to STE, IFFCO stated adding this miscellaneous charge in
the Bill of Entry dated 4 April, 2015 in the assessable value for the purpose of
payment of duty.
5. A show cause notice dated 12 August, 2015 was issued to the Appel-
lant (IFFCO) mentioning therein that the service charges of Rs. 17/- per MT were
in the nature of “miscellaneous charges” and accordingly, were required to be
included in the assessable value from 5 October 2010 to 5 May 2015, in view of
the provisions of Rule 10(1)(e) of the Customs Valuation (Determination of Value
of Imported Goods) Rules, 2007 [2007 Valuation Rules]. The show cause notice
mentions that the STE purchased urea of its own and then sold it to Indian buy-
ers on High Sea Sale basis. Thus, the purchases made by STE from foreign sellers
and subsequent sale to Indian buyers are independent transactions. The show
cause notice also mentions that 2% High Sea Sale Commission should be includ-
ed in the assessable value for calculation of Customs duty. The relevant portions
of the show cause notice are reproduced below :
“M/s. Indian Farmers Fertilizers Cooperative Ltd., IFFCO Sadan, C-1, Distt.
Centre, Saket place, New Delhi-110017 having IEC Code Number-
0588034096 (hereinafter referred to as the ‘IFFCO’) is a Multistate Co-
Operative Society primarily engaged in production and distribution of ferti-
lizers. During the investigation of the angle of supplier (OMIFCO) and
buyer (IFFCO) as related persons in terms of Rule 2(2) of the Customs Val-
uation (Determination of Value of Imported Goods) Rules, 2007 for the im-
port of urea from Customs House Pipavav, it has been revealed by the im-
porter that their import is High Sea Sale. Further during the filling of their Bill
of Entry No. 8800082, dated 4-4-2015, the importer paid duty on Misc. Charges.
However, the importer has not been paying duty on 2% High Sale Commission and
Misc. Charges in their previous Bills of Entries filed at Customs House, Pipavav.
An investigation has been initiated in the matter for non-payment of duty
on 2% High Sale Commission and Misc. Charges.
… … …
7.3 As per the letter F. No. 8-2/2013-Ship-II, dated 2-2-2015 of Assistant
Commissioner(s), Ministry of Chemicals & Fertilizers, Department of Ferti-
lizers addressing to the Deputy Commissioner, Krishnapatnam Port, An-
dhra Pradesh clarifying that the STEs (State Trading Enterprises) are paid
Rs. 17/- per MT as service charges on the urea imported by them. Based on
this letter, the noticee started paying duty on Rs. 17/- per MT from the B/E
No. 8800082, dated 4-4-2015.
7.4 It is seen from the High Sea Sale Agreement as well from the statement
of Shri Surinder Singh Rawat, Joint General Manager (Finance), other doc-
uments available on record that the present import is on High Sea Sale ba-
sis. Under the provisions of the Import and Export Policy of the Govern-
ment of India the STE’s is designated as a canalizing agent for import of
Urea from foreign countries. The STEs import the urea in bulk purchasing
the same from the foreign sellers. It then enters into sale agreement with
Ministry of Chemicals & Fertilizers, Government of India on what is known
as high seas sales basis. Consideration paid by the purchasers of the urea from the
STE’s includes apart from the purchase value incurred by the STE’s an additional
sum of Rs. 17/- per MT as service charges. These service charges are in the nature
of ‘Misc. Charges’ and accordingly to be includible in the assessable value in view
of the Rule 10(1)(e) of the Customs Valuation (Determination of Price of Imported
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