Page 201 - ELT_15th August 2020_Vol 373_Part 4

2020 ] IFFCO LTD. v. PRINCIPAL COMMISSIONER OF CUSTOMS, JAMNAGAR 535

challan dated 23 May, 2015 towards the duty for the miscellaneous charges for
imports from 19 May, 2010 to 18 May, 2015 with interest of Rs. 9,37,680/- by
challan dated 26 May 2015 only as a commercial decision to avoid litigation and
the same could not be taken as an admission on the part of the Appellant to in-
clude the miscellaneous charges in the transactions value.
8. The Appellant also pointed out in its reply that the Central Board of
Excise and Customs, New Delhi [CBEC], in its Circular dated 11th May, 2004,
had clarified that it had not approved the Mumbai Customs House existing prac-
tice of adding 2% Notional High Sea Sales Commission in the Cost, Insurance
and Freight [CIF] value and the actual High Sea Sale Contract price paid by the
buyer would constitute the transaction value. The Appellant also stated that the
extended period of limitation provided for under the proviso to Section 73(1) of
the Finance Act, 1994 [the Finance Act] could not have been invoked as there was
no wilful misstatement or suppression of facts with intent to avoid payment of
service tax. The Appellant also pointed out that the goods could not have been
confiscated nor penalty could have been imposed.
9. The Principal Commissioner, however, did not accept the conten-
tions of the Appellant and after rejecting the declared value, re-determined it.
Accordingly, the demand of differential Customs duty was confirmed and the
urea imported by IFFCO was held liable for confiscation under Section 111(m) of
the Customs Act. Interest was also directed to be paid and penalty was also im-
posed. It is this order 13 May 2015 passed by the Principal Commissioner that
has been assailed in this appeal.
10. Shri Deepak Kumar, Learned Consultant appearing with Shri Atul
S. Chabra, Taxation Head of the Appellant made the following submissions :
(i) The Principal Commissioner committed an error in including the
miscellaneous charges of Rs. 17/- per MT paid by the Government
of India to the STE in the assessable value on which the Appellant
was required to pay duty. These charges are in the nature of agency
charges which the canalising agency (STE) gets from the Govern-
ment of India for the service of identifying and indenting the import
of urea from foreign suppliers. The ultimate import of urea by STE
takes place on behalf of the Government of India. These charges are
not paid by the Appellant to the Government of India when it pur-
chases the urea nor these charges are paid by the Appellant to a
third party and therefore, cannot be included under Rule 10(1)(e) of
the 2007 Valuation Rules in the assessable value. The decision of the
Supreme Court in Hyderabad Industries Ltd. v. Union of India [2000
(115) E.L.T. 593 (S.C)] would not be applicable in the present case as
the service charges were paid by the Appellant therein to MMTC;
(ii) Under the Income Tax Act, tax is deducted at source on payment of
agency commission and not when sale or purchase takes place.
Thus, deduction of 2% TDS by the Government of India fortifies the
contention of the Appellant that STE is actually an agent of the
Government of India and the agency commission cannot enter into
the transaction value. In support of this contention, Learned Coun-
sel placed reliance upon the decisions of the Tribunal in : (a) Gupta
Chemicals Ltd. v. Commissioner of Customs, Jaipur [2002 (148) E.L.T.
535 (Tri. - Del.)] ; (b) Anand Textiles v. Commissioner of Customs,

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