Legal principle

Under the second proviso to sub-rule (2) of Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, the freight cost includible in the assessable value of goods imported by air shall not exceed 20% of the FOB value, and since this is a statutory ceiling there can be no estoppel against law and no requirement of payment under protest to claim it.

Court decision

The Madras High Court allowed the Civil Miscellaneous Appeal, set aside CESTAT's Final Order No.42350/2017 dated 4/10/2017, answered the substantial questions of law in favour of the appellant, and remanded the matter to the Commissioner of Appeals to reassess the Bill of Entry dated 20/2/2009 in accordance with Rule 10 of the Customs Valuation Rules, 2007, within one month, with no costs.

Facts

Tecno Doors Pvt Ltd imported Landing Panel Left and Right Landing Doors and a Panel Centre Cabin Operator from Spain under a Bill of Entry dated 20/2/2009, covered by invoice No.09/224 dated 16/2/2009 showing FOB value of EURO 19855.60 and air freight of EURO 10648.34. The appellant added freight of EURO 3900 (20% of FOB value) per Rule 10 of the Customs Valuation Rules, 2007, but the assessing officer directed inclusion of the balance freight of EURO 6748.34 as miscellaneous charges, raising the assessable value to INR 20,33,121.28 against the claimed INR 16,93,054, and duty was paid on the enhanced value before clearance. The appellant's appeal against the assessment was dismissed by the Commissioner of Customs (Appeals) on 18/12/2009, apparently on the ground that duty was not paid under protest. CESTAT, by Final Order No.42350/2017 dated 4/10/2017, remanded the matter to the Commissioner (Appeals) to first ascertain whether the higher freight/miscellaneous charges were added by the assessing officer, and to decide on merits only if so. The appellant then filed this Civil Miscellaneous Appeal under Section 130 of the Customs Act, 1962 against the CESTAT order.

Key provisions

• Rule 10, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Cost and services
• Section 14(1), Customs Act, 1962 — Valuation of goods
• Section 128, Customs Act, 1962 — Appeal to Commissioner (Appeals)
• Rule 2, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Definitions
• Section 130, Customs Act, 1962 —  Appeal to High Court