Demurrage charges excluded from customs assessable value; valuation rules cannot extend beyond Section 14.

Demurrage charges paid on imported goods are not includible in the assessable value for customs duty under Section 14 of the Customs Act, 1962. The valuation scheme does not treat demurrage as a permissible component of the imported goods' value, and the Explanation to Rule 10(2)(a) of the Customs Valuation Rules, 2007 was treated as beyond the scope of Section 14 and invalid to that extent. In the absence of any stay of the contrary High Court decision, that legal position was applied as binding, and the demand based on inclusion of demurrage in customs valuation was not sustainable.

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Issues: Whether demurrage charges paid on imported goods are includible in the assessable value for customs duty purposes.

Analysis: The valuation of imported goods under Section 14 of the Customs Act, 1962 was applied in light of the settled view that demurrage is not part of the costs contemplated by the principal legislation. The explanation to Rule 10(2)(a) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 had been held to be beyond the scope of Section 14 and, therefore, ultra vires. In the absence of any stay of the contrary High Court decision, that legal position was treated as binding and applicable.

Conclusion: Demurrage charges are not includible in the assessable value of imported goods. The issue is answered in favour of the assessee.

Final Conclusion: The demand based on inclusion of demurrage in customs valuation could not be sustained, and the appeal succeeded.

Ratio Decidendi: Demurrage charges are not a permissible component of the assessable value of imported goods under Section 14 of the Customs Act, 1962, and any rule treating them as such is invalid to that extent.

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