Transaction value for export duty is FOB including associated costs; ex mine invoice price alone is not determinative.

Transaction value for export duty is the FOB value at the time and place of exportation and must be determined under the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 read with Section 14 of the Customs Act, 1962; an ex mine invoice price that does not reflect delivery at the export point is not the transaction value. Costs necessary to place goods on the carrier - including domestic transport, port handling, insurance and similar expenses - are included in transaction value even if paid directly by the overseas buyer to third parties. Valuation follows the prescribed rule based sequence and may be rejected if accuracy is doubted.

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Issues: (i) Whether export duty is to be levied on the transaction value (price declared in invoice) or on FOB value; (ii) If export duty is to be calculated on FOB value, whether freight, insurance and similar costs paid by the overseas buyer to persons other than the exporter are relevant to determination of transaction value for exports to a landlocked country; (iii) If export duty is to be calculated on transaction value, whether the transaction value is the invoice price or to be computed otherwise for exports to a landlocked country.

Issue (i): Whether export duty will be levied on the transaction value (invoice price) or on FOB value.

Analysis: Valuation of export goods is governed by Section 14 of the Customs Act, 1962 and the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. Transaction value means the price actually paid or payable for delivery at the time and place of exportation. The time and place of exportation occur when goods are cleared for export (Let Export Order) at the port or land customs station; therefore invoice ex-mine price does not reflect delivery at that time and place. The Shipping Bill and Bill of Export (Forms) Regulations, 2017 require analysis of export value showing FOB, freight, insurance and related components, indicating that FOB (including costs necessary to place goods on carrier) is the basis for export assessment.

Conclusion: Export duty shall be levied on the transaction value determined in accordance with the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962; the ex-mine invoice price alone is not the transaction value.

Issue (ii): Whether freight, insurance and similar costs paid by the overseas buyer to persons other than the exporter are relevant for determination of transaction value for exports to a landlocked country.

Analysis: The transaction value for delivery at the time and place of exportation includes all costs necessary to bring the goods to the carrier at the named place of exportation. WTO/GATT-consistent FOB calculation and the statutory and regulatory scheme include domestic transport, storage, port handling, insurance and related costs as constituents of FOB. The fact that such costs are paid by the overseas buyer directly to third parties does not exclude them from being components of the value payable for delivery at the place of exportation.

Conclusion: All associated costs, including freight, insurance and similar expenses paid by the overseas buyer to the exporter and/or to other persons, are relevant for determination of transaction value for delivery at the time and place of exportation.

Issue (iii): The method of computation of transaction value of export goods for landlocked country exports - whether invoice price or computation as per rules.

Analysis: The Customs Valuation (Determination of Value of Export Goods) Rules, 2007 prescribe the method of valuation: accept transaction value subject to verification, otherwise determine value by comparison, computed value (costs plus profit) or residual methods; rules also provide for rejection of declared value where proper officer has reason to doubt truth or accuracy. The statutory framework does not differentiate landlocked destinations; valuation must follow the rules to arrive at FOB/transaction value for delivery at the place and time of exportation.

Conclusion: The transaction value must be computed as prescribed under the Customs Valuation (Determination of Value of Export Goods) Rules, 2007; invoice ex-mine price is not the method of computation for transaction value where it does not represent delivery at the time and place of exportation.

Final Conclusion: The transaction value for levy of export duty is the FOB/transaction value determined under Section 14 of the Customs Act, 1962 read with the Customs Valuation (Determination of Value of Export Goods) Rules, 2007, and includes associated costs necessary to deliver the goods at the time and place of exportation; the ex-mine invoice price alone is not the transaction value.

Ratio Decidendi: For determination of export duty the transaction value under Section 14 of the Customs Act, 1962 is the FOB value at the time and place of exportation, which comprises the price actually paid or payable for delivery at that time and place and includes all costs necessary to bring the goods to the carrier (including domestic transport, insurance and handling) irrespective of who pays those costs.

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