Residual customs valuation of bunker fuel accepted on IOCL price, with no double addition of freight or insurance charges.
Imported bunker fuel lacking transaction value or comparable identical/similar goods must be valued under the residual method in Rule 9(1) of the Customs Valuation Rules, 2007, using a reasonable available Indian benchmark. The Tribunal accepted the IOCL selling price as the proper base in this factual setting. Freight, insurance and landing charges already embedded in that selling price could not be added again for customs valuation, as this would amount to double loading. The assessable value was therefore to be re-determined on the IOCL price without those further additions, with consequential refund relief admissible in accordance with law.
Issues: (i) Whether the value of fuel oil and diesel oil consumed during the vessel's coastal run was to be determined on the basis of contemporaneous import value under the Customs Valuation Rules, 2007 or by adopting the IOCL selling price; (ii) whether freight, insurance and landing charges could be added again to the IOCL price while determining the assessable value.
Issue (i): Whether the value of fuel oil and diesel oil consumed during the vessel's coastal run was to be determined on the basis of contemporaneous import value under the Customs Valuation Rules, 2007 or by adopting the IOCL selling price.
Analysis: The goods had no available transaction value, and there was no available value of identical or similar goods. In such circumstances, valuation had to proceed under the residual method in Rule 9(1) of the Customs Valuation Rules, 2007. The valuation exercise therefore turned on adoption of a reasonable basis consistent with the statutory valuation framework and the available Indian data. The Tribunal accepted that the IOCL selling price was the relevant base for assessment in this factual setting.
Conclusion: The assessable value was required to be determined under the residual method, and the IOCL selling price was accepted as the proper base.
Issue (ii): Whether freight, insurance and landing charges could be added again to the IOCL price while determining the assessable value.
Analysis: The IOCL price already included the elements of freight and insurance, and the same charges could not be loaded again for customs valuation. The Tribunal followed the earlier decision on the same valuation method and held that once those elements formed part of the selling price, further addition of notional freight, insurance and landing charges was unwarranted. The assessable value was therefore to be re-determined without such double addition.
Conclusion: Freight, insurance and landing charges were not liable to be added again to the IOCL selling price.
Final Conclusion: The valuation adopted by the Revenue was set aside, re-determination was directed on the IOCL selling price without double loading of freight, insurance or landing charges, and consequential refund relief was held admissible in accordance with law.
Ratio Decidendi: Where imported bunker fuel has no transaction, identical or similar goods value, assessment must proceed under the residual valuation method and charges already embedded in the base selling price cannot be added again for customs valuation.
TaxTMI 
AI Drafter ✕
TaxTMI 
