2018 (2) TMI 1134 - AT - Customs

Refund claim - valuation - air freight - case of appellant is that as per Rule 10(2) of the Customs Valuation (Determination of value of the imported goods) Rules, 2007, the assessable value has to be arrived by restricting the air freight component to 20% of the FOB value of the goods - Held that - the freight element has to be restricted to 20% of the FOB value when the cost of transportation of the goods is ascertainable and the transportation is by air - appellant has paid total duty of ₹ 23, 85,494/-. The duty payable under the proviso of Rule 10 would be ₹ 15,09,938/-. Hence, the appellants have paid excess duty of ₹ 8,75,356/- - appellant is eligible for refund - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Customs duty refund based on Rule 10(2) of the Customs Valuation Rules, 2007.

Analysis:
The case involved the appellants, engaged in manufacturing motor vehicles, who imported cars from M/s. Kia Motors Corporation, Korea. They declared the goods' value on CIF basis in the Bill of Entry. The appellants paid a total Customs duty of &8377; 25,85,494/-. However, they later realized that the air freight component paid on CIF basis exceeded the 20% rate of the FOB value, as per Rule 10(2) of the Customs Valuation Rules, 2007. They sought a refund of the excess duty paid due to this discrepancy. The Commissioner (Appeals) had rejected their plea, leading to this appeal before the Tribunal. The main contention was that the appellants were eligible for a refund of &8377; 8,75,356/-, the excess duty erroneously paid by them.

The appellant's counsel argued that as per Rule 10(2) of the Customs Valuation Rules, 2007, the cost of transport of imported goods should not exceed 20% of the freight on the FOB value of the goods. Citing a previous Tribunal decision in the case of Tecno Doors Pvt. Ltd. Vs. CC (Air), Chennai, the counsel highlighted that only 20% of the FOB value should be considered for adding the freight element to the assessable value of goods imported by air. The appellant's position was supported by this precedent, emphasizing the need for a refund of the excess duty paid.

The Tribunal analyzed Rule 10(2) of the Customs Valuation Rules, 2007, which specifies that in the case of goods imported by air, the cost of transport should not exceed 20% of the FOB value of the goods. Referring to the previous Tribunal decision, the Tribunal concurred that the freight element should be restricted to 20% of the FOB value when the transportation cost is ascertainable and the goods are imported by air. Consequently, the Tribunal held that the appellants were entitled to a refund of the excess duty paid. The impugned order rejecting the refund was set aside, and the appeal was allowed, granting consequential relief to the appellants.