Legal principle

Under Section 14(1) of the Customs Act, the FOB price actually paid or payable for export goods is itself the transaction value for levy of export duty and, the provision being plain and unambiguous, no export duty element can be deducted from it — the FOB price is not a cum-duty price.

Court decision

The Tribunal dismissed all the appeals and sustained the impugned orders, ruling in favour of the department. It held that Section 14(1) is plain and clear and does not allow abatement of the duty element from the FOB price in determining the transaction value for export duty; the FOB price actually paid or payable is the transaction value and is not a cum-duty price; and the Board's circular under Section 151A is binding on quasi-judicial authorities under the Board.

Facts

Three exporters of iron ore — Sesa Goa Ltd., Sociedade de Fomento Industrial Pvt. Ltd. and Chowgule & Co. Pvt. Ltd. — made exports after 01/01/2009, when export duty on iron ore had become leviable ad valorem. The department assessed export duty on the full FOB value of the goods without deducting the duty element, acting on CBEC Circular No. 18/2008-Cus dated 10/11/2008 issued under Section 151A of the Customs Act. The appellants paid duty under protest on the full FOB value and carried the assessed shipping bills to the Commissioner (Appeals), Goa, who sustained the assessments in four orders. The exporters then appealed to the CESTAT, West Zonal Bench at Mumbai.

Key provisions

• Section 14, Customs Act, 1962 — Valuation of goods
• Section 151A, Customs Act, 1962 — Instructions to officers of customs
• Section 2(22), Customs Act, 1962 — Definitions