TaxTMI 
TaxTMI 
2025 (11) TMI 967
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....to avail ineligible benefits of MEIS, ROSL, DBK and IGST the goods they were examined by the officers of customs. The goods were found as declared in the shipping bill, invoice and packing list. The officers conducted a market enquiry to ascertain the market value of the export goods in Indian market. They came to the conclusion that the Free on-Board [FOB] value of the export goods was much higher then their market value in India. Therefore, it appeared to the department that the exporter had over-valued the goods in order to avail ineligible benefits of MEIS, ROSL, DBK and IGST. 3. It needs to be pointed out that all these benefits to exporters are available as a percentage of the FOB value of the export goods. The Additional Commissioner passed order rejecting the FOB value of the export goods and redetermining the FOB value of the export goods under Rule 6 of the Customs Valuation (Determination of Value of Export Goods) Goods, 2007 [Export Valuation Rules]. He also confiscated the export goods under section 113(i) of the Customs Act, 1962 [Act] and allowed their redemption on payment of redemption fine of Rs. 7,00,000/- under section 125 of the Act. He also imposed penaltie....
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....l is if the FOB value of export goods can be redetermined by the Customs Officer under section 14 of the Act read with the 2007 Rules which provide for determination of the value. We find that the expression 'FOB value' is not defined under the Act but it is commonly understood as it is defined in INCOTERMS. INCOTERMS are universally accepted terms of international commerce between buyers and sellers. If goods are sold on FOB basis, the seller will be responsible for all costs and risks until the goods are put on board the vessel or aircraft. Once the goods are put on board the vessel or aircraft, the seller will be free. All costs and risks associated with the transportation will thereafter be on the buyer's account. In other words, FOB is the transaction value between the buyer and the seller agreed on the terms that the seller will be responsible until the goods are put on board the vessel or aircraft and will be free thereafter. No stranger to the contract of sale can modify the FOB value because it is the transaction value. 4. The Act does not empower the proper officer to change the transaction value (which in this case is the FOB value) between the buyer and the sel....
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....e; (iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section: Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50. ***** 2007 Rules 1. Short title, commencement and application.- (1) These rules may be called the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. (2) They shall come into force on the 10th day of October, 2007. (3) They shall apply to the export goods. ***** 6. Residual method. (1) Subject to the provisions of rule 3, where the value of the export goods cannot be determined under the provisions of rules 4 and 5, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules provided that local market price....
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....t and different. Duties have to be calculated on the value determined under section 14 and the 2007 Rules. Unless the transaction value (FOB value) is rejected by the proper officer, value under section 14 shall be the same as the transaction value. If the proper officer rejects the transaction value under the 2007 Rules and re-determines it, the two will be different and duties have to be paid on the value determined by the proper officer and not on the transaction value (FOB value). 7. The export benefits in the form of drawback and refund of RoSL have, however, to be determined on the transaction value (FOB value) and not on the assessable value determined under section 14 and the 2007 Rules. It also needs to be pointed out that the export benefits in the form of drawback and RoSL come with an obligation on the part of the exporter to export goods and receive remittances equivalent to the transaction value (and not as per the value determined by the officer). It is for this reason that the export benefits are linked to the transaction value and not to the assessable value. For instance, if the exporter declares an FOB value as US$ 1000 and the proper officer re-determin....
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....de under this Act or in the case of baggage with the declaration made under section 77; 11. Goods which do not correspond in any material particular or value to the declaration in the Shipping Bill are liable to confiscation. If the goods are declared as 'X' and they are found to be 'Y', or if they are declared to be of quantity 'A' and they are found to be of quantity 'B', they will be liable to confiscation. The goods should also conform to the value declared in the shipping bill. The term used is 'value' which is the value under section 14. The exporter has an obligation to declare the correct value. If he is exporting the goods for US$ 5,000 and declares the value as US$ 10,000, the goods shall be liable to confiscation under section 113 (i). At the time of Shipping Bill, the only value which is available with the exporter is the transaction value which shall also be the value under section 14 unless and until the proper officer rejects the transaction value and determines the value through some other method during re-assessment. 12. The question which arises is whether the export goods have to conform to the value known to the exporter and declared in the Shi....