Customs valuation and CIF freight: sea freight applied where goods were normally imported by sea, not exclusively by air.

For customs valuation under Section 14(1) of the Customs Act, the relevant freight element depended on the normal mode of import shown by the invoice and confirmation order. The Tribunal found that the goods were ordinarily meant to be transported by sea, and the department had not proved that they were exclusively imported by air. Sea freight was therefore the proper basis for the CIF value, and air freight could not be included on the facts established.

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Issues: Whether, for customs valuation under Section 14(1) of the Customs Act, sea freight was to be taken into account in the CIF value where the imported goods were normally meant to be transported by sea but were actually imported by air.

Analysis: The valuation adopted by the lower authority proceeded on the footing that air freight could be used for determining the CIF value. The Tribunal found, however, that the goods were shown by the invoice and confirmation order to be normally imported by sea, and that the department had not established that the goods were exclusively imported by air. The Tribunal held that sea freight was the relevant freight element for such goods, and that air freight could be included only where exclusivity of air import was proved by the department.

Conclusion: Sea freight was required to be taken into account, and inclusion of air freight was not justified on the facts proved.

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