3M INDIA LTD. Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) The appellant has filed this appeal against OIA No. 15/04, dated 20th January, 2004 passed by the Commissioner of Customs (Appeals) Bangalore. Appellant imported certain items by air and claimed that the freight should be limited to 20% of the FOB value in accordance with Rule 9(2) of Customs Valuation Rules, 1988. Along with the Bill of Entry they filed the invoice and purchase order. Even though, the freight has been separately mentioned in the invoice and also there is no dispute as regards the amount of freight in the transaction, the lower authorities have given a finding that the value indicated in the invoice should be treated as CIF and the same should be adopted for assessment purposes. In other words, the lower authorities have ignored the provisions of Rule 9(2) of the Customs Valuation Rules. Hence, the appellants have come before this Tribunal for relief.

(2.) SMT . Rukmini Menon, Advocate appeared for the appellants and Shri Ganesh Havanur learned SDR for the revenue.

(3.) WE have heard the parties. Both the lower authorities have embarked on a lengthy discussion to give a finding that the value given in the invoice represents CIF value and therefore, the same should be adopted for assessment purposes. The lower authorities have not applied Rule 9(2) of the Customs Valuation Rules, 1988 properly. The Proviso to Rule 9(2) clearly says that in the case of goods imported by air, and the cost of transport of the imported goods is ascertainable such cost shall not exceed 20% of free on board (FOB) value of the goods. Assuming that the value indicated in the invoice is CIF, there is a clear indication of the actual freight which is also supported by airway bills. In these circumstances, the appellants contention that the freight should be limited to 20% of FOB is correct. Since the invoice indicates that the price of the goods includes insurance, the lower authorities hold that, that value cannot be treated as FOB. This objection is not tenable. The invoice indicates clearly the insurance amount also. The total invoice amount is 1011.44 US$. The insurance and the freight are also shown. Therefore, there is no difficulty in applying Rule 9(2) to limit the freight to 20% of FOB. Normally, the air freight is very high. That is why there is a provision in the Customs Valuation Rules to limit it to 20% of FOB. The lower authorities have not appreciated this point. They have gone into a very futile discussion as to whether the price declared is FOB or CIF. We do not find any reason for rejecting the appellants claim to limit the freight to 20% of the FOB as per Rule 9(2). Hence we allow the appeal with consequential relief. (Pronounced in open Court on 15 -2 -2006)