JNPT Standing Order
Domestic Value of Warehousing Sale of Imported Goods is not
Transaction Value Sale is not in the Course of International Trade
• Board Over Rides
Garden Silk Mills Case
• Commission not
to be Included in Value
• Original Import
Value is Value for Warehouse Sale
[Customs
Standing Order No. 73 dated 15th November 2010]
The following Standing Order was
issued by the Commissioner of Customs (Imports) Jawaharlal Nehru Custom House
on 15th November 2010.
Attention of all the staff and officers is hereby drawn to the Board’s
Circular No 11 dated June 3rd, 2010 in respect of determination value under
section 14 of Customs Act,1962 in respect sale of goods.
The prevalence of
divergent practices in field formations with respect to the determination of
assessable value of imported goods that are warehoused under Section 58/59 of
the Customs Act, 1962 and sold before being cleared for home consumption has
been brought to the notice of the Board.
2. “Section
14 of Customs Act, 1962 reads as under:
“For the purposes of the Customs Tariff Act, 1975 (51 of
1975), or any other law for the time being in force, the value of the imported
goods and export goods shall be the transaction value of such goods, that is to
say, the price actually paid or payable for the goods when sold for export to
India for delivery at the time and place of importation, or as the case may be,
for export from India for delivery at the time and place of exportation, where
the buyer and seller of the goods are not related and price is the sole
consideration for the sale subject to such other conditions as may be specified
in the rules made in this behalf.”
2.1 The current
Section 14 states that the value of the imported goods shall be the transaction
value of goods, that is to say,
the price actually paid or payable for the goods when sold for export to
India for delivery at the time and place of importation. The sale of goods after warehousing them in
India cannot be considered a sale for export to India. It cannot be
stated that the export of goods is not complete even after the imported goods
were cleared for warehousing in the country of import. Thus, the price
at which the imported goods were sold after warehousing them in India does not qualify
as the price actually paid or payable
for the goods when sold for export to
India for delivery at the time and place of importation and, hence, the
value at which such transaction takes place will not qualify as the transaction
value, as per Section 14.
3. For
the period prior to October 2007, Section 14 read as:
For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or
any other law for the time being in force, where-under a duty of customs is
chargeable on any goods by reference to their value, the value of such goods
shall be deemed to be the price at
which such or like goods are ordinarily sold, or offered for sale, for
delivery at the time and place of importation or exportation, or as the case
may be, in the course of international trade ---”.
3.1 The
sale of imported goods made after warehousing cannot be considered to have been
made in the course of international trade
and hence, the price at which such sale takes place is not a price at which
such or like goods are ordinarily sold, or offered for sale, for delivery at
the time and place of importation, in
the course of international trade, in terms of Section 14.
4. The CBEC manual also states at Para 15 of Chapter 10 that:
“The rate of duty applicable is as per provisions of Section 15 of
the Customs Act i.e. on the date on which the goods are actually removed from
the warehouse. However, when the warehousing period or the extended warehousing
period has expired, the duty payable is with respect to the date when the
warehousing/extended warehousing period expired and not the actual date of
removal. In so far as value for assessment of duty for warehoused goods is
concerned, it is not required to be re-determined and it is the original value
as determined at the time of filing of Into-Bond Bill of Entry and assessments
done before warehousing.”
5. In this connection, the decision of Hon’ble Supreme Court in the case of Garden Silk Mills
[1999 113 ELT 358 SC] was also examined. Hon’ble
Supreme Court had held in the case of Garden
Silk Mills that “-- the value has
to be determined with relation to time when physical delivery to the importer
can take place. Physical delivery can take place only after Bill of Entry,
inter alia, for home consumption is filed and it is the value at that point of
time which would be relevant –
”However, in the case of Garden Silk
Mills, the Court was considering the issue of includibility
of landing charges in the assessable value of imported goods. The goods in that
case were cleared for home consumption after import and no warehousing or sale
was involved before clearance of the imported goods. The issue of whether sale
of imported goods after warehousing would constitute a sale in the course of
international trade was not an issue before the Hon’ble
Court. Thus, the main issue involved as well as the facts and circumstances of
the present case are not identical to those of Garden Silk Mills case. Hence,
the rationale of the said case cannot be applied to the present case.
6. Further,
Board had examined the valuation of goods sold on “high-seas-sales” basis and
had issued Circular 32/2004 Customs dated May 11, 2004 stating that in such
case, the actual high-seas-sale-contract price paid by the last buyer would
constitute the transaction value under Rule 4 of Customs Valuation Rules, 1988
and inclusion of commission on notional basis may not be appropriate and that,
however, the responsibility to prove that the high-seas-sales-transaction
constituted an international transfer of goods lies with the importer. The
facts and circumstances of a sale of warehoused goods are not similar to the
case of “high-seas-sales” since the sale/transfer of imported goods after
warehousing cannot be considered to have been made in the course of
international trade. Further, the above-referred circular had clarified that
the inclusion of commission on notional basis may not be appropriate even in
case of “high-seas-sales”. Therefore, the question of adding any amount on
notional basis in the case of goods already warehoused in India and sold
subsequently would not arise.
7. Thus, in the case of sale of imported goods
after they are warehoused on Indian territory, the
value at which such transaction took place will not qualify as the transaction
value, as per Section 14.
The above instructions should be adhered to while assessing
ex-bond Bills of Entry.
F.NO. S/
6-GEN- 4492 /2010 BOND JNCH