Export valuation of iron ore turns on full contractual freight, not net remittance after commission deductions.

For export valuation of iron ore, freight deductible under the charter party is the full contractual freight, because assessable value turns on freight incurred and payable under the contract, not the lesser net amount remitted abroad after commission and broker deductions. Amounts retained as commission or similar charges form part of the freight structure and do not reduce the deduction from export value. On that basis, the f.o.b. value must be computed after deducting the full freight, and the refund claim based on that method is supported.

---

---

Issues: Whether, for determining the assessable value of exported iron ore for export duty, the freight payable under the charter party had to be deducted in full on the basis of the contractual freight rate, and not with reference to the lesser amount actually remitted abroad after retaining commission and other deductions.

Analysis: The freight liability was governed by the charter party, which fixed freight at US$ 8.70 per wet metric ton and provided for deductions such as commission and broker's payment to be retained or passed on from the gross freight. The amount remitted abroad did not represent the full freight payable. For valuation purposes, what mattered was the freight incurred and payable under the contract, not the net remittance reflected by the bank's certification. The retained amounts and broker's commission were part of the contractual freight structure and could not be treated as reducing the freight deductible from the export value.

Conclusion: The full contractual freight was deductible for arriving at the f.o.b. value of the ore, and the assessee's claim for refund was maintainable. The dismissal by the lower authorities was unsustainable.

---