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Regarding inclusion of ship demurrage charge in valuation of goods
Circular No. 14 dated 2nd March 2001
I am directed to invite your kind attention to the Board�s letter
issued vide F.No.467/ 21/ 89-Cus.V. dated 14.8.1991, which states that �demurrage� and
�despatch� money may not form a part of assessable value.
2. The decision of
the Board was based on the then prevailing practice and a general perception of
the Conference of Collectors held in April, 1991 about the nature of demurrage
charges and dispatch money, without specifically examining the implications of
Rule 9 of the Customs Valuation Rules or the GATT Valuation Rules.
3. It was never the
intention of the Board to �exempt� ship demurrage charges from customs duty
besides; the aforesaid clarification letter proceeded on a premise that
post-despatch charges and ship demurrage are to be similarly treated in the
matter of valuation of imported goods. Importers have, however, disregarded the
letter in the matter of post-despatch charges. Wherever there is reduction of
freight charges, the benefit by way of reduction in the value of goods has been
claimed by the importers and in certain cases their claims also upheld by the
Appellate Authorities (upto the level of CEGAT) and some of these decisions have
attained finality, although in one case an appeal is pending in the Supreme
Court.
4. In the
circumstances, it is considered advisable to clarify that nothing contained in
the earlier letter should be construed as authorizing the exclusion of any ship
demurrage charges paid which are required to be included in the assessable value
of goods under Section 14 of the Customs Act, 1962 inter alia by virtue of Rule
9(2) of the Customs Valuation Rules 1988.
The earlier letter dated 14.8.1991 referred in para
1 supra shall stand withdrawn.
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