TIOL-DDT 271 · the untouched capture
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<html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body bgcolor="#FFFFFF"> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#663399" size="3">TIOL-DDT 271</font><br> 28 12 2005<br> Wednesday</b></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Computation of freight of time chartered/daughter vessel - Board issues draft circular</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The issue regarding computation of freight of time chartered/daughter vessel and it’s inclusion in the assessable value was taken up in detail by the committee headed by Shri R.K.Chakraborti, the then Member (L&J), and it was held that the freight of daughter vessel would have to be treated as extension of freight and not as part of landing charges. It was also suggested that the same should be calculated on normative basis on the World Scale Norms. The World Scale gives the rate in terms of US$ PMT annually for a standard vessel of capacity 75000 MT between two geographical points whose co-ordinates in terms of latitudes and longitudes are available with World Scale Organisation (WSO), and for different sizes of vessels and for different months, the rate can be determined after applying a multiplying factor (monthly average freight rate assessment) arrived on the basis of market trends world over.<br> <br> The above issue was discussed in the Chief Commissioner’s Conference held on 1st October 2005 at Mumbai. The conference agreed that the recommendations of the Shri R.K.Chakraborti Committee should be accepted and that pending cases of assessments should be finalized as per the two alternative methods of computation of cost of transportation for daughter/time chartered vessel. The first option which is based on the World Scale rates duly adjusted on the basis of AFRA rates, should be followed wherever the World scale rates are available for the transportation between high seas and respective minor ports in India. In cases where the World Scale Freight Rate Index is not available, the cost element required for arriving at the freight rate may be based on the benchmarks used by the World Scale Association. In both cases, Wharfage and transshipment charges should be added to arrive at the total freight. It was also made clear that the data in respect of these calculations should be submitted by the respective importers to the satisfaction of the assessing officer. Accepting services by the Cost Accountants may also be considered by the respective Commissionerates depending upon the extent of complexity of the cases.<br> <br> Now Board has decided that all pending cases involving lighterage charges would be finalized on the basis of World Scale Rates and AFRA wherever available. In case of minor ports where WSO rates along with AFRA are not available, the concerned Commissioners should direct the shipping companies to get the WSO rates fixed. All pending provisional assessments should be finalized accordingly <br> <br> Board’s draft does not mention whether they want suggestions and if so where to send them.<br> <br> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cuscir.htm">Board’s draft circular</a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"> <b>Assessment of Bulk Liquid Cargo – Ship Ullage Report or Shore Tank receipt</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Board’s Circular No.96/2002-Customs, dated 27.12.2002 hasconveyed that, in the case of bulk liquid cargo imports, whether for home consumption or warehousing, the shore tank receipt quantity should be taken as the basis for levy of customs duty.<br> <br> A doubt has arisen that in cases where customs duty is chargeable on ad-valorem basis, whether there would be any requirement for determination of the quantity of the goods as the basis for levy of customs duty would be the transaction value, i.e., invoice price and not the quantity.<br> <br> This issue was discussed in the Conference on “Customs Valuation and Customs Procedures” held on 21st and 22nd August 2003 and also in the Chief Commissioner’s conference on Customs Valuation held on 1st October 2005 at Mumbai. The conference was of the view that the assessment of bulk liquid cargo should be based on invoice price, which is the price paid or payable for the imported goods, i.e., transaction value, irrespective of quantity ascertained through shore tank measurement or any other manner. Wherever the duty is leviable at specific rate, quantity determined during the shore tank measurement should be accepted.<br> <br> Board now wants to issue a circular that it has been decided that, in all cases where customs duty is leviable on ad-valorem basis, the assessment of bulk liquid cargo should be based on invoice price, which is the price paid or payable for the imported goods, i.e., transaction value, irrespective of quantity ascertained through shore tank measurement or any other manner. Further, in respect of delivery at more than one port, the value should be apportioned based on the quantity intended to be discharged at the relevant ports. However, wherever the customs duty is leviable at specific rate, the determination of quantity would be relevant for levy of customs duty.<br> <br> Board’s draft does not mention whether they want suggestions and if so where to send them.<br> <br> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cuscir.htm">Board’s draft circular</a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>Includibilty of ship demurrage charges in the assessable value- the saga continues – yet another draft circular</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The Government lost more than a thousand Crores of rupees because the Board which issues circulars and forgets them, forgot to withdraw a circular in spite of a favourable order from Tribunal. Remember the IOCL case? Please see <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=681">our story on the subject.</a> Board had vide letter issued in F.No.467/01/2002-Cus.V, dated 20th October 2004, conveyed that in light of the decision of the Board to file review petition before the Supreme Court of India, in the case of M/s.Indian Oil Corporation all importations prior to 02.03.2001 may be kept provisional. The Government’s review petition was dismissed by the Supreme Court on 2.3.2005 for an inordinate unexplained delay of 255 days in filing the petition. It took the Board more than 9 months to come up with a draft circular that Supreme Court decision has to be followed till 2.3.2001. What a respect for the highest judicial forum! What happens after 2.3.2001? Board is not sure. It will come up with clarification soon. Why not now?<br> <br> Board’s draft does not mention whether they want suggestions and if so where to send them.<br> <br> <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=wnew/cuscir.htm">Board’s draft circular</a></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b>"Too bad the only people who know how to run the country are busy driving cabs and cutting hair."</b></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><font color="#FF6666">Until tomorrow with more DDT<br> <br> Have a nice day.<br> <br> Mail your comments to</font></b> <a href="vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>