Customs valuation must reflect an air-shipment packing discount where lighter packing and lower forwarding costs are established.

A contractual 6% air-shipment discount linked to elimination of export packing had to be deducted in customs valuation because the evidence showed lighter packing and lower packing and forwarding costs for air despatch. The view that only sea-freight norms should govern valuation was rejected, and the discount was treated as part of the assessable value computation. The lower orders were set aside and the matter was remitted for reconsideration on that basis.

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Issues: Whether the 6% reduction stipulated as an air shipment discount was required to be deducted from the assessable value while arriving at customs valuation.

Analysis: The contract provided for a 6% reduction towards elimination of export packing in case of despatch by air. The evidence showed that air shipment involved lighter packing and lower packing and forwarding expense, and that the discount was granted to purchasers when shipment was by air. The reasoning of the lower authorities that only sea freight norms should govern valuation was rejected.

Conclusion: The 6% reduction had to be taken into account in computing the assessable value. The orders of the lower authorities were set aside and the matter was remitted to the Assistant Collector for reconsideration accordingly.

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