Contemporaneous customs export data may support FOB valuation, with freight and insurance added to determine assessable value in settlement.

Contemporaneous U.S. Customs export declarations, supported by supplier purchase invoices, may be accepted as the basis for FOB valuation where the Revenue does not establish a reliable ground to reject them. The assessable value is then to be derived by adding actual freight and insurance to reach CIF value, rather than by relying on private sale records recovered in India. On the accepted valuation, the goods remained liable to confiscation for undervaluation and penalty exposure under Customs law; however, in settlement proceedings, the duty, interest, fine and penalty were quantified, and immunity from further fine, penalty and prosecution was granted beyond the amounts specified, subject to compliance and absence of fraud or misrepresentation.

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Issues: (i) Whether the FOB value declared on the basis of U.S. Customs export data and supporting purchase invoices should be accepted for settling the assessable value of the imported cranes; (ii) whether the goods were liable to confiscation and the applicants/co-applicants liable to penalty, and whether immunity from penalty and prosecution could be granted in the settlement proceedings.

Issue (i): Whether the FOB value declared on the basis of U.S. Customs export data and supporting purchase invoices should be accepted for settling the assessable value of the imported cranes.

Analysis: The applicants produced documents showing the declared export values before U.S. Customs, supported by purchase invoices of the foreign supplier. The Bench accepted these documents as the proper basis for arriving at FOB value and held that the assessable value should be worked out by loading actual freight and insurance, rather than by adopting sale prices from private records recovered in India. The Bench also noted that the respondents had sufficient opportunity to verify the documents and had not shown a basis to discard them, while the affidavit filed by the applicant corroborated their genuineness for settlement purposes.

Conclusion: The FOB value declared on the basis of U.S. Customs data was accepted, and the duty liability was settled on that basis.

Issue (ii): Whether the goods were liable to confiscation and the applicants/co-applicants liable to penalty, and whether immunity from penalty and prosecution could be granted in the settlement proceedings.

Analysis: On the accepted valuation, the Bench held the goods liable to confiscation for undervaluation and recorded liability to penalty under the relevant Customs Act provisions. At the same time, considering the settlement application, payment position, and the overall facts, the Bench fixed the duty, interest, fine and penalty payable, and granted immunity from fine, penalty and prosecution beyond the amounts specified in the order. The order also directed that the bond and bank guarantees would be discharged after compliance and that the settlement could be voided if obtained by fraud or misrepresentation.

Conclusion: Confiscation and penalty exposure were upheld in principle, but relief was granted by way of settlement, with limited fine and penalty amounts fixed and immunity granted beyond those amounts.

Final Conclusion: The settlement application succeeded in substance to the extent that the duty was quantified on the accepted declared FOB values, while the applicants and co-applicants were subjected to limited fine and penalty and given immunity from further penal and prosecutorial consequences under the settlement order.

Ratio Decidendi: In settlement proceedings under the Customs Act, contemporaneous foreign customs export declarations supported by supplier invoices may be accepted as the basis for FOB valuation when the Revenue does not establish a reliable ground to reject them, and the assessable value must then be derived by adding freight and insurance to arrive at CIF value.

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