The Central Board of Excise and Customs (CBEC) has issued a very useful circular reiterating its earlier clarification that the value of the imported goods shall be the transaction value of goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation and that the sale of goods after warehousing them in India cannot be considered a sale for export to India.
The Circular says that the price at which the imported goods were sold after warehousing them in India does not qualify as the transaction value, according to Section 14 of the Customs Act, 1962. The implication is that the value assessed before warehousing the goods remains unchanged for the purpose of charging duty even if in-bond sale (after warehousing the goods) is made a higher or lower price.
The CBEC has found it necessary to issue this circular despite its clear instructions through its Manual of Supplementary Instructions, 2001, that as far as the value for assessment of duty for warehoused goods is concerned, it is not required to be re-determined and it is the original value as determined at the time of filing of Into-Bond Bill of Entry and assessments done before warehousing.
The provocation for reiterating its earlier instruction is that the field formations were following divergent practices and some officers were of the view that the price at which the original importer has sold the goods in-bond, before a Bill of Entry for home consumption is filed, should be taken as the assessable value of the imported goods under the said Section 14.
The Circular sets at rest any scope for divergence from its earlier instructions and patiently explains the basis for its view. It also discusses and says why the Supreme Court judgment in the case of Garden Silk Mills [1999 (117) ELT 358 (SC)] will not have a bearing on the issue on hand. It also draws the distinction between the valuation in case of high seas sales and valuation in case of in-bond sale of warehoused goods. It is a poorly worded circular but it is quite earnest in trying to explain the correct position.
The key issue that should engage the attention of CBEC is that the field formations, quite often, take a view that is different from the CBEC instructions. That causes enormous hardship at the ground level because of uncertainties. Many times, the importers and exporters are exposed to whims of the officers they deal with and not categorical instructions of CBEC.
For example, CBEC has instructed vide its Customs circular number 22/2004 dated May 11, 2004 that in case of classification or valuation of disputes, goods must be cleared against provisional assessment, as a matter of right. It says that goods should not be held up by the Customs except in cases where prosecution is contemplated or where the goods are prohibited for import. But the field formations do not respect this instruction. Goods are held up and importers made to pay up under duress in most situations.
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There is no dearth of judgments that the CBEC circulars bind the Customs authorities. CBEC should not hesitate to crack its whip, when it comes across blatant disobedience of its instructions.
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