Circular No. 14/2001-Customs,V
2nd March, 2001
Government of India
Ministry of Finance
Department of Revenue
( Central Board of Excise and Customs )
Subject : Regarding inclusion of ship demurrage charge in Valuation of Goods.
I am directed to invite your kind attention to the Board’s letter issued vide F.No. 467/21/89-Customs-V, dated 14.8.1991, which states that `demurrage’ and `despatch’ money may not form a part of assessable value.
1 The decision of the Board was based on the then prevailing practice and a general perception of the Conference of Collectors held in April, 1991 about the nature of demurrage charges and despatch money, without specifically examining the implications of Rule 9 of the Customs Valuation Rules or the GATT Valuation Rules.
2 It was never the intention of the Board to “exempt” ship demurrage charges from customs duty, Besides, the aforesaid classificatory letter proceeded on a premise that post-despatch charges and ship demurrage are to be similarly treated in the matter of valuation of imported goods. Importers have, however, disregarded the letter in the matter of post-despatch charges. Wherever there is reduction of freight charges, the benefit by way of reduction in the value of goods has been claimed by the Appellate Authorities (upto the level of CEGAT) and some of these decisions have attained finality, although in one case an appeal is pending in the Supreme Court.
3 In the circumstances, it is considered advisable to clarify that nothing contained in the earlier letter should be construed as authorizing the exclusion of any ship demurrage charges paid which are required to be included in the assessable value of goods under Section 14 of the Customs Act, 1962 interalia by virtue of Rule 9 (2) of the Customs Valuation Rules, 1988.
The earlier letter dated 14.8.1991 referred in para 1 supra shall stand withdrawn.