Demurrage charges paid in respect of post importation activity not includable in assessable value for levy of Customs duty

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C.C.E., Mangalore Vs. Mangalore Refinery & Petrochemicals Ltd. [2016 (1) TMI 325 – Supreme Court]


Mangalore Refinery and Petrochemicals Limited (“the Respondent”) imported 94204.425 MTs of Crude Oil vide Bill of Entry No. 0924, dated May 23, 2001 and warehoused the same into their shore tanks. However, the goods could not be cleared on time and it was observed that the Respondent had paid demurrage charges among other fees/charges. The Department alleged that demurrage charges were also to be included in the assessable value for the purpose of levy of Customs duty.


The Hon’ble Supreme Court relied upon the decision in the case of Commissioner of Customs, Ahmedabad Vs. Essar Steel Ltd., [2015 (319) E.L.T. 202 (S.C.)] and held that the demurrage charges are paid after the goods reached at Indian ports and therefore, it is post-importation event and cannot form part of transaction value. Thus, the Respondent isn’t liable to pay Customs duty on these demurrage charges. Accordingly, the appeal filed by Revenue was dismissed.