Customs valuation in high sea sales: actual invoiced value prevails over notional CIF plus commission, with charges and limitation also sustained.
In a high sea sale transaction, the actual invoiced transaction value prevailed over a notional CIF value plus 2% commission where the higher contract value was available, so customs valuation could not be fixed on the lesser deemed basis. L.C. charges were treated as pre-import expenses and included in assessable value, and administrative charges were also included because no evidence showed they were separate post-import services or deductible amounts. The discrepancy between the agreement value and the higher tax invoice value was treated as misdeclaration and suppression, making the extended limitation period applicable. The differential customs duty demand was sustained.
Issues: (i) Whether, in a high sea sale transaction, the assessable value for customs purposes could be taken at CIF value plus 2% notional commission or whether the higher value disclosed in the tax invoice was includible; (ii) Whether L.C. charges and administrative charges were includible in the assessable value; (iii) Whether the extended period of limitation was invocable.
Issue (i): Whether, in a high sea sale transaction, the assessable value for customs purposes could be taken at CIF value plus 2% notional commission or whether the higher value disclosed in the tax invoice was includible.
Analysis: The declared value in the Bill of Entry was not the only relevant benchmark where the record showed that the High Sea Seller had raised a tax invoice for a higher amount than CIF value plus 2%. The method of taking CIF value plus 2% notional commission was treated as applicable only where the actual contract value was not available. Since the higher contractual/invoiced value was available, that method could not govern valuation in the present case.
Conclusion: The higher invoice value was correctly treated as relevant for valuation, and the assessee's challenge to adoption of the declared CIF plus 2% basis failed.
Issue (ii): Whether L.C. charges and administrative charges were includible in the assessable value.
Analysis: L.C. charges were treated as pre-clearance and pre-import expenses borne during the course of import, and therefore includible in assessable value. As to administrative charges, no evidence was produced to establish that they represented erection, installation, or any separately identifiable post-import service. In the absence of proof, they were treated as part of the seller's sale profit and not as deductible charges.
Conclusion: Both L.C. charges and administrative charges were held includible in the assessable value, against the assessee.
Issue (iii): Whether the extended period of limitation was invocable.
Analysis: The High Sea Sale agreement disclosed a lower consideration, while the tax invoice disclosed a higher value. This discrepancy was treated as a misdeclaration and suppression of the true value from the department, justifying invocation of the extended period.
Conclusion: The extended period of limitation was validly invoked, against the assessee.
Final Conclusion: The demand of differential customs duty, along with the consequential findings on valuation and limitation, was sustained and the appeals were dismissed.
Ratio Decidendi: Where the actual higher transaction value in a high sea sale is available, it prevails over a notional CIF plus commission basis; pre-import charges and unexplained ancillary charges are includible in assessable value, and discrepancy between the declared agreement value and the invoiced value constitutes suppression for limitation purposes.