Customs valuation of bunker stores must follow the deductive method where domestic price lists already include local charges.

Where bunker stores remaining on a vessel converted from foreign run to coastal run were valued on the basis of an Indian IOC price list already reflecting local bunker charges, customs valuation had to follow the deductive method under Rule 7 of the Customs Valuation Rules, 1988. Rule 9(2) was not the proper basis for treating that domestic price as if it required further loading with freight, insurance and landing charges. The cited price list was accepted as reflecting the relevant local costs, so the addition of those charges was unsustainable and the differential duty demand was set aside.

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Issues: Whether the assessable value of bunker stores remaining on a vessel converted from foreign run to coastal run was to be determined by applying Rule 9(2) of the Customs Valuation Rules, 1988 by adding freight, insurance and landing charges, or by adopting the deductive value method under Rule 7 of the Customs Valuation Rules, 1988.

Analysis: The value declared by the appellant was based on the IOCL price list used for bunkering at Indian ports. The earlier appellate order on the same recurring issue had held that Rule 9 was not the appropriate basis and that valuation should be worked out under Rule 7. Under the deductive value method, the price of goods sold in India is taken with deductions for usual transport and insurance costs and other associated charges, rather than treating the local bunker price as an international FOB price and loading it again with freight, insurance and landing charges. The cited IOCL price list was accepted as already reflecting the relevant local charges.

Conclusion: Rule 9(2) was not applicable on the facts, and valuation had to be made under Rule 7. The addition of freight, insurance and landing charges was unsustainable, and the differential duty demand was set aside.

Final Conclusion: The appeal succeeded and the valuation adopted by the lower authorities was rejected in favour of the appellant.

Ratio Decidendi: Where the price of bunker stores is already based on a domestic Indian price list reflecting local charges, customs valuation should follow the deductive method under Rule 7 and not a loading under Rule 9(2) for freight, insurance and similar additions.

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