Valuation of goods

Related judgements & precedents

These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.

1. Wipro LTD vs Assistant Collector of Customs

   Supreme Court of India 16 Apr 2015 Binding (SC) Reportable

   Court's Decision & Legal Precedent

   When actual loading, unloading and handling charges associated with the delivery of imported goods at the place of importation are ascertainable and can be objectively verified, those actual charges must be used in determining the customs valuation of goods under Section 14 of the Customs Act, 1962. The rule-making authority under Section 156 of the Customs Act cannot prescribe a fixed percentage or fictitious charge as a substitute for actual ascertainable costs. Such substitution would be ultra vires the statutory power and violative of the constitutional guarantee of equality under Article 14 of the Constitution. The notional fixation of charges irrespective of actual determinable costs is arbitrary, lacking nexus with the statutory objective, and contrary to the principle embodied in GATT guidelines that customs valuation must be based on actual costs.

   On this section: Section 14 establishes the fundamental principle that customs duty is to be based on transaction value, which is the price actually paid or payable for goods. Sections 14(1A) empowers rules to be made for determining this value. Section 156 grants power to make rules. The court interpreted these sections as establishing that actual costs must be used when ascertainable.

   Read the full order on eCourts India

2. Siddachalam Exports Private LTD vs Commissioner of Central Excise Delhi-iii

   Supreme Court of India 01 Apr 2011 Binding (SC) Reportable (2011) 4 SCC 572 (Inferred from Supreme Court judgment reporting practice)

   Court's Decision & Legal Precedent

   The procedure prescribed under Section 14(1) of the Customs Act, 1962 and Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 must be strictly adhered to for determining the value of goods entered for exportation, irrespective of whether any duty is leviable. Once the transaction value is challenged, the Revenue must bear the burden of proving mis-valuation by sequentially proceeding through Rules 5 to 8, with market enquiry permissible only as a last resort after exhausting alternative methods. Deviation from this mandatory statutory procedure vitiates the proceedings and warrants remand for fresh adjudication in accordance with law.

   On this section: Court established that Section 14(1) prescribes the method for valuation where value is determined at the price at which such or like goods are ordinarily sold or offered for sale at the place of exportation in the course of international trade, between unrelated parties. This applies to export value determination independent of duty assessability

   Read the full order on eCourts India

3. Bharat Petroluem Corporation LTD vs Commissioner of Customs (import), Mumbai

   Supreme Court of India 02 Sep 2015 Binding (Supreme Court)

   Court's Decision & Legal Precedent

   The quantity of goods to be assessed for customs duty purposes is the actual quantity of goods physically imported and received at the place of importation in India (at the shore tanks at Indian ports), not the quantity stated in the bill of lading from the country of export. This is because: (a) the taxable event under Section 12 of the Customs Act is 'importation', which is complete only when goods become part of the land mass within India and are cleared for home consumption; (b) Sections 13 and 23 establish that duty is not payable on goods lost, pilfered, or destroyed before clearance for home consumption; (c) Section 14 requires valuation 'at the time and place of importation'; (d) the Customs Valuation Rules' definition of 'transaction value' refers to goods 'actually imported'; and (e) whether customs duty is levied at a specific rate or on an ad valorem basis does not change this fundamental principle.

   On this section: Specifies that goods must be valued for customs purposes at the time and place of importation, establishing the temporal and spatial dimension of valuation.

   Read the full order on eCourts India

4. Commnr. of Customs, Ahmedabad vs Essar Steel LTD

   Supreme Court of India 13 Apr 2015 Binding (Supreme Court) Reportable

   Court's Decision & Legal Precedent

   Payments made for technical services to be provided post-importation in India, even if rendered under an agreement signed prior to the equipment purchase agreement, cannot be added to the assessable value of imported goods under Rule 9(1)(e) of the Customs Valuation Rules, 1988, unless such technical services are a pre-importation condition of sale and the goods cannot be used without them. The key distinction is whether the services are pre-importation (affecting the availability or utility of the goods at the time of import) or post-importation (affecting only the setup, commissioning, or operation after import). Services for coordination, advice, and commissioning of plant post-importation, without transfer of intellectual property rights, are post-importation services and must be excluded from customs valuation.

   On this section: Establishes the foundational principle that customs duty is chargeable on goods by reference to their value at the time and place of importation. Section 14(1-A) provides that the price shall be determined in accordance with rules made in this behalf, specifically referencing the Customs Valuation Rules.

   Read the full order on eCourts India

5. Commissioner of Customs, Bangalore vs Gmr Energy LTD

   Supreme Court of India 27 Oct 2015 Binding (Supreme Court) with significant persuasive precedent Reportable

   Court's Decision & Legal Precedent

   Where imported goods under a rotable exchange programme are valued at published catalogue prices that are list unit prices established worldwide without adjustment for return of used parts, and no 'sale' occurs under the agreement, the invoice value based on such catalogue prices constitutes the proper assessable value under customs law, and additional value corresponding to returned parts cannot be added merely because used parts are returned to the foreign supplier under the agreed rotable exchange programme, absent explicit evidence in the invoices themselves showing the prices were adjusted downward to account for such returns.

   On this section: Basis for determining value of imported goods and best judgment assessment

   Read the full order on eCourts India

6. Commnr. of Customs, Vishakhapatnam vs Aggarwal Industries LTD

   Supreme Court of India 17 Oct 2011 Binding (SC) Reportable

   Court's Decision & Legal Precedent

   In the absence of material evidence of a nature directly indicating contemporaneous imports at higher prices where such comparables have genuinely comparable contract dates and shipment timing, and absent proof that any of the specific circumstances enumerated in Rule 4(2) of the Customs Valuation Rules 1988 are present, the customs revenue is bound to accept the invoice price as the transaction value for duty assessment purposes. The mere fact that international market prices fluctuated between contract date and actual shipment date, when such shipment delay is authorized under the contract and both parties honor the original price without modification, does not constitute grounds to reject the declared transaction value. 'Reason to doubt' under Rule 10A CVR 1988 requires material evidence, not mere suspicion based on price differentials.

   On this section: Establishes the deeming provision that value of goods for ad valorem duty purposes shall be the price at which such or like goods are ordinarily sold in international trade between unrelated parties; Court emphasized that this is the foundational principle unless special circumstances exist

   Read the full order on eCourts India

7. The Commnr. of Customs(gen) Mumbai vs Abdulla Koyloth

   Supreme Court of India 29 Oct 2010 Binding (SC) Reportable As cited in the judgment header

   Court's Decision & Legal Precedent

   While the burden of proof lies on customs authorities to establish that a transaction value declared by an importer is incorrect, once it is established through credible evidence (such as market surveys conducted with the importer's acknowledgment or clear misdeclaration of goods) that the declared value does not reflect the true transaction value, the transaction value may be rejected and the sequential valuation procedure under Rules 5-8 of the Customs Valuation Rules must be applied. The findings of misdeclaration, once established through consistent evidence including admissions by the importer, must be properly examined and weighed by the appellate authority rather than being ignored or dismissed summarily. A proper remand is warranted when the appellate tribunal has failed to appreciate material evidence on record, including the importer's own statements accepting the correctness of alternative valuations.

   On this section: Determination of assessable value - price at which such or like goods are ordinarily sold in international trade where seller and buyer have no interest in each other's business, applied as the foundational standard for transaction value

   Read the full order on eCourts India

8. Commissioner of Customs vs National Lamination Indus

   Supreme Court of India 07 Oct 2015 Binding (SC) Marked not reportable

   Court's Decision & Legal Precedent

   When an importer declares significantly lower values for goods imported through one port compared to the value of the same or similar goods imported by the same importer through another port, and the lower declared values lack substantiation by documentary evidence (such as contemporaneous contracts, inspection certificates, or quality reports showing genuine qualitative differences), the customs authority is justified in rejecting the declared transaction value and applying Rule 8 of the Customs Valuation Rules to assess the goods at the minimum value at which the same importer has imported similar goods through other ports, particularly when the importer fails to provide satisfactory explanation for the price differential or port selection strategy.

   On this section: Establishes that duty of customs is chargeable by reference to value, and the value of goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale. Applied to reject the declared lower values for goods that the importer itself was importing elsewhere at higher prices.

   Read the full order on eCourts India

The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.