Delivery-to-place-of-importation inclusion: overseas loading and transport included; domestic transhipment and FTWZ charges excluded.

Costs incurred for delivery to the place of importation - specifically loading, unloading, handling and transport up to the Indian port of discharge - are includible in transaction value under the valuation rule framework; by contrast, costs arising from transhipment within India (movement from Indian port to FTWZ) and costs incurred at or after the place of importation (including FTWZ rent, handling and loading/unloading) are excluded from assessable value, consistent with the transhipment exclusion and the delineation of includible delivery-related charges.

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Issues: (i) Whether loading, unloading, handling and transportation charges incurred at the overseas load port and transportation up to the Indian discharge port are includible in the assessable value on clearance from FTWZ to DTA; (ii) Whether loading, unloading, handling charges and transportation costs incurred at the Indian seaport/airport for moving goods from the seaport/airport to the FTWZ are includible in the assessable value on clearance from FTWZ to DTA; (iii) Whether charges incurred at FTWZ (including rent, unloading, loading charges, etc.) are includible in the assessable value on clearance from FTWZ to DTA.

Issue (i): Whether charges incurred at the overseas load port and transportation up to the Indian discharge port are includible in assessable value.

Analysis: Rule 10(2) of the Customs Valuation Rules, 2007 includes transportation, loading, unloading and handling charges associated with delivery of imported goods to the place of importation. The phrase is to be understood in the context of costs incurred for delivery to the place of importation (i.e., costs incurred up to the Indian port of discharge). Circular No.39/2017 and the amendment to the valuation rules clarify that loading/unloading/handling charges incurred for delivery "to" the place of importation (including those at the overseas loading port and transport up to the Indian discharge port) are within the ambit of includible costs.

Conclusion: The overseas load port loading, unloading and handling charges and transportation charges up to the Indian discharge port are includible in the assessable value.

Issue (ii): Whether charges incurred at the Indian seaport/airport and transport to FTWZ are includible in assessable value.

Analysis: The sixth proviso to Rule 10(2) of the Customs Valuation Rules, 2007 excludes costs of insurance, transport, loading, unloading and handling associated with transhipment where goods imported by sea or air are transhipped to another customs station in India. Movement from the Indian port of discharge to an FTWZ unit is transhipment under the SEZ Rules and the Sea Cargo Manifest and Transhipment Regulations. Circular No.39/2017 clarifies that costs related to transhipment within India are excluded from the transaction value.

Conclusion: Loading, unloading, handling charges and transportation costs incurred at the Indian seaport/airport for moving goods from the seaport/airport to the FTWZ are not includible in the assessable value.

Issue (iii): Whether charges incurred at FTWZ (including rent, unloading, loading charges, etc.) are includible in assessable value.

Analysis: The valuation scheme in Rule 10(2) and Circular No.39/2017 confines inclusion to specified costs associated with delivery to the place of importation; costs incurred at or after the place of importation in India are not included. Movement to FTWZ constitutes transhipment between customs stations; costs incurred at the FTWZ are associated with movement within India and are excluded by the sixth proviso. The valuation rules do not provide for inclusion of warehousing rent or similar FTWZ charges.

Conclusion: Charges incurred at FTWZ, including rent and loading/unloading at FTWZ, are not includible in the assessable value.

Final Conclusion: Charges incurred at the overseas load port and transport up to the Indian discharge port are includible; charges incurred at the Indian seaport/airport for movement to FTWZ and charges incurred at FTWZ are not includible, and the ruling is accordingly partly in favour of the applicant.

Ratio Decidendi: Under Rule 10(2) of the Customs Valuation Rules, 2007 only costs and charges incurred for delivery of imported goods to the place of importation are includible in transaction value, while costs associated with transhipment between customs stations within India and costs incurred at or after the place of importation are excluded (as clarified by Circular No.39/2017 and the sixth proviso to Rule 10(2)).

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