Customs valuation of credit insurance charges turns on verification of whether the policy covers imported goods.

Credit insurance charges are includible in customs assessable value only if the insurance element relates to the imported goods and is not already part of the transaction value under Section 14 of the Customs Act, 1962 read with Rule 10 of the Customs Valuation Rules, 2007. The disputed charges were said to cover payments for goods manufactured and sold in India, not the imported goods, but the relevant policy was not verified by the authorities. The addition could not be sustained without examining the policy terms, and the matter was remanded to the adjudicating authority for verification.

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Issues: Whether credit insurance charges paid by the importer to its foreign principal were liable to be added to the transaction value of imported goods while determining assessable value.

Analysis: Section 14 of the Customs Act, 1962 read with Rule 10 of the Customs Valuation Rules, 2007 permits addition towards insurance only where the insurance element relates to the imported goods and is not already included in the transaction value. The disputed charges were stated to relate to insurance covering payments for goods manufactured and sold by the importer in India, and not to the imported goods. The records showed that the relevant insurance policy had not been verified by the authorities below. Verification of the policy terms was therefore necessary to determine the true nature of the payment.

Conclusion: The addition of credit insurance charges could not be sustained without verification of the insurance policy, and the matter was remanded to the original adjudicating authority for that purpose.

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