Presumptive freight valuation allowed where actual transport cost is unascertainable, without supporting penalty or interest

Where the actual freight for imported goods is not ascertainable, customs valuation law permits transportation cost to be included in assessable value on a prescribed presumptive basis, and the text notes acceptance of 20% of FOB value for freight in that situation. It also states that such recomputation of value does not by itself justify penalty or interest, and the prior relief against penalty and interest remained undisturbed for the imports discussed.

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Issues: Whether, where the actual cost of transportation for imported goods is not readily ascertainable, the freight component could be determined at 20% of FOB value under the customs valuation rules, and whether such determination could sustain penalty or interest.

Analysis: Section 14(1) of the Customs Act, 1962 read with Rule 9(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 makes the cost of transportation includible in the assessable value of imported goods. Where the freight is not ascertainable, the proviso permits determination on the prescribed presumptive basis. On the facts, the Bahrain imports were treated on the basis of the actual differential, but the Court accepted the alternative position that 20% of FOB value could be adopted for freight where ascertainment was not possible. The earlier findings of the Tribunal setting aside penalty and interest were left undisturbed, and the same treatment was maintained for the Brazil imports.

Conclusion: The freight component for the Bahrain imports was directed to be computed at 20% of FOB value, but no penalty or interest could be levied on that basis.

Final Conclusion: The valuation dispute was resolved by permitting a presumptive freight calculation for the Bahrain imports while sustaining the Tribunal's relief against penalty and interest, leaving the Revenue with only limited monetary relief.

Ratio Decidendi: When actual transportation cost is not ascertainable under customs valuation law, the prescribed presumptive method may be applied for inclusion of freight in assessable value, but such recomputation does not by itself justify penalty or interest.

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