Valuation (customs) — Demurrage charges and despatch money
not to form part of assessable value
F. No. 467/21/89-Cus.V, dated 14-8-1991
Government of India
Ministry of Finance (Department of Revenue)
Central Board of Excise & Customs, New Delhi
Demurrage charges and despatch money Not to form
part Subject : of the assessable value - Regarding.
The Kandla Custom House had raised the issue relating to
the inclusion of demurrage charges and exclusion of despatch money for computing
the assessable value ascertainable under Section 14 of the Customs Act, 1962.
Pursuant to the decision taken in the Tariff Conference of Collectors held in
August, 1981, the issue was further discussed in the Tariff Conference of
February, 1989. The Conference had desired that the matter may be re-examined in
its totality especially in the context of current valuation principles based on
the GATT Valuation at Goa on 4th and 5th April, 1991 examined the problem posed
in entirety. The conference came to the conclusion that in the post-despatch
money would not constitute elements of value since element for the carriage.
These moneys are in the nature of penalties or rewards by virtue of a contracted
charterer agreement between the carrier and the charterer and this in no way
could be conceived as being part of the freight or for that matter part of the
price actually paid or payable for the goods.
Having regard to the above and the fact that in no other
Custom House there was a practice to include or deduct such moneys, it has been
decided that ‘demurrage’ and ‘despatch’ money may not form a part of assessable
value.
JUDICIAL ANALYSIS
C.B.E. & C. Circular No. 467/21/89-Cus.-N, dated
14-8-91 was cited by assessee which clarify that demurrage and dispatch money
are not to form part of the assessable value - In view of this Circular,
Tribunal ordered that demurrage charges not to be included in assessable value —
Indian Oil
Corporation v. Commissioner — 2000 (122) E.L.T. 615 (Tri.-LB). Appealed to Supreme
Court admitted in 2001 (130) E.L.T. A254 (S.C.).
C.B.E. & C. Circular No. 467/21/89-Cus.-IV, dated
14-8-91. - Assessee referred this Circular and plea that in view of this
Circular Bank charges not to be includible in the assessable value - Appeal of
assessee allowed. — EXIM India Oil Co. Ltd. v. Commissioner — 2001 (131) E.L.T. 207 (Tribunal).