Valuation of DTA clearances by EOU excludes freight and insurance where statutory valuation rules and circulars so provide.

For clearances by a 100% export-oriented unit into the domestic tariff area, assessable value must be determined under the statutory excise and customs valuation scheme, and freight and insurance from the factory gate to the border or domestic tariff area are not to be included. A binding Board circular specifically excluded such transport charges from the assessable value. The contrary adoption of a CIF basis to add freight and insurance was inconsistent with that scheme and could not sustain the duty demand.

---

---

Issues: Whether, in valuing goods cleared by a 100% export-oriented unit into the domestic tariff area, freight and insurance could be added to the sale price so as to adopt a CIF basis and sustain the duty demand.

Analysis: The valuation of goods cleared into the domestic tariff area had to be determined in accordance with the statutory scheme referred to in Section 3 of the Central Excise Act and the relevant customs valuation principles. The Board's circular specifically stated that freight and insurance charges incurred for transporting goods from the factory gate to the zone border or to the domestic tariff area should not be added to arrive at the assessable value. The impugned valuation, which proceeded on the contrary footing and raised the demand on that basis, was inconsistent with the circular and the governing valuation method.

Conclusion: Freight and insurance could not be added to the sale price for this purpose, and the duty demand based on the impugned valuation was unsustainable.

Final Conclusion: The valuation adopted by the lower authority was set aside and the assessee's clearance valuation was accepted, resulting in allowance of the appeal.

Ratio Decidendi: For clearances by a 100% export-oriented unit into the domestic tariff area, assessable value cannot be enhanced by adding freight and insurance where the applicable statutory valuation scheme and binding circular direct that such charges are not to be included.

---