Valuation (Customs) — Ship demurrage charges to be included
in assessable value
Circular No. 14/2001-Cus., dated 2-3-2001
F. No. 467/25/2000-CUS.V
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
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-Cus.-V, dated 14-8-1991, which states that
‘demurrage’ and
‘despatch’
money may not form of a part of assessable value.
2. 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.
It was never the intention of the Board to “exempt” ship 3.
demurrage charges from customs duty. Besides, the aforesaid clarificatory 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 charged, the benefit by way of reduction in the
value of goods has been claimed by the importers and in certain cases their
claims also upheld by the Appellate Authorities (up to the level of CEGAT) and
some of these decisions have attained finality, although in one case an appeal
is pending in the Supreme Court.
In the circumstances, it is considered advisable to
clarify 4. that nothing contained in the earlier letter should be construed as
authorising 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 inter alia
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shall stand withdrawn.