2026-VIL-717-CESTAT-DEL-CU
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CUSTOMS CESTAT Cases

Customs - Determination of assessable value in ex-works price – Appellant declared the ex-works price as FOB value in the B/E and added the cost of local transport up to the port of export as well as the cost of transport up to the place of port of import and transit insurance - Department contended that the freight should have been calculated as 20% of the FOB value instead of 20% of the ex-works value, leading to short payment of duty – HELD - The contention of the importer that the value cannot be determined from ex-works price under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is incorrect. In this case, invoices were not issued on CIF or FOB basis but were issued on ex-works basis. As per Rule 10(2) of the Valuation Rules, the cost of transportation up to the place of import has to be included in the assessable value, which includes not only the cost of transport from the port of export but also the cost of transport up to the port of export. The FOB value includes all costs up to placing the goods on board the vessel/aircraft, i.e., the costs of transport from the factory have to be included to arrive at the FOB value. The method used by the importer to calculate the assessable value from the ex-works price is incorrect. The Revenue is correct in asserting that the cost of air freight that was to be included in the assessable value should have been 20% of the FOB value and not 20% of the ex-works price - It is certainly an oversight on the part of the appellant in not adding the cost of local transport upto the port of export to the ex-works price and declaring it as the FOB value. If there was an oversight by the importer, there was also an oversight by the officers who did not correct the declaration and assess the B/E correctly during this period. There is nothing on record to show that either the importer or the officers or the customs broker had any intention to evade duty or reduce the liability of duty. Since the entire period of demand was within the extended period of limitation, the same is set aside. Consequently, the penalty also needs to be set aside - The impugned orders are set aside and the appeal is allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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