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Issues: Challenge of freight value loading, confiscation of goods, penalty imposition, compliance with EXIM Policy.
In this case, the appellants challenged the loading of actual freight value instead of 20% of the FOB value as per Rule 9(2) of the Customs Valuation Rules. The appellant's counsel argued that Rule 9(2) clearly mandates adding only 20% of the FOB value, and there was no basis for confiscation of goods or penalty imposition. The imported second-hand moulds were deemed capital goods for actual use, complying with EXIM Policy conditions. The original authority confirmed no contravention of the policy. The tribunal noted that Rule 9, read with Rule 2 proviso 1, limits freight cost to 20% of the FOB value for air-imported goods with ascertainable costs. The tribunal accepted the explanation for the invoice entry mistake and found no mis-declaration. Consequently, the order was set aside, and the appeal was allowed with consequential relief. The learned DR contested the case, supporting the departmental view. However, after careful consideration, the tribunal found that the proviso in Rule 2 of Customs Valuation Rules restricts freight costs for air-imported goods to 20% of the FOB value if the cost is ascertainable. The tribunal acknowledged the supplier's explanation for the invoice error and accepted it. The original authority had already confirmed compliance with EXIM Policy and the Handbook of Procedure for importing second-hand capital goods for actual use. Therefore, the tribunal concluded that there was no justification for enhancing the FOB and freight charges beyond 20%, leading to the setting aside of the impugned order and allowing the appeal with consequential relief.
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