Market value at time of delivery and place of importation is Assessable Value for Customs duty

CA Bimal Jain

Facts:

Hindustan Lever Ltd. (the Respondent) imported 3,800 MT of soda ash light from China. The invoice price of these goods was USD 153.50 per MT. However, at the time of importation of these goods, the market price reduced drastically to USD 120 per MT. The Respondent had filed two Bills of Entries through its customs agents, declaring the value of the aforesaid consignment at USD 120 per MT. However, the Department alleged invoice price of the goods which was stated to be USD 153.50 per MT to be taken up for assessment in respect of the aforesaid import.

Period Involved: June, 1997

Held:

The Hon’ble Supreme Court held that in terms of Section 14(1) of the Customs Act as was prevalent during the relevant period, the value of the goods which are imported was to be fixed at the price on which such or like goods are ordinarily sold or offered for sale. Further, the said valuation has to be done at the time of delivery and place of importation or exportation. Thus, the lower authorities had made a mistake in ignoring the relevant documents and invoking the provisions of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 for the purpose of arriving at the value, which was not necessary at all. Thus, the appeal filed by the Department was dismissed.

Our Comments:

It is important to note down the prevalent Section 14 of the Customs Act, which was substituted vide the Finance Act, 2007 effective from October 10, 2007. In terms of substituted Section 14 of the Customs Act, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf.

(Author can be reached at Email: bimaljain@hotmail.com)

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