No. 14/2001-CUS.V Dated 2nd March, 2001
Regarding inclusione of ship demurrage charge in Valuation of Goods.
I am directed to invite your kind attention to the
Board’s letter issued vide F.No.467/21/89-Cus.V. dated 14.8.1991, which
states that ‘demurrage’ and ‘despatch’ money may not form a part
of assessable value.
2. The decision of the Board was based on the then
prevailing practice and a general perception of the Conference of Collectors
held in April, 1991 about the nature of demurrage charges and dispatch money,
without specifically examining the implications of Rule 9 of the Customs
Valuation Rules or the GATT Valuation Rules.
3. It was never the intention of the Board to
“exempt” ship demurrage charges from customs
duty. Besides, the aforesaid clarificatory letter proceeded on a premise
that post-despatch charges and ship demurrage are to be similarly treated in the
matter of valuation of imported goods. Importers have, however, disregarded the
letter in the matter of post-despatch charges. Wherever there is reduction of
freight charges, the benefit by way of reduction in the value of goods has been
claimed by the importers and in certain cases their claims also upheld by the
Appellate Authorities (upto the level of CEGAT) and some of these decisions have
attained finality, although in one case an appeal is pending in the Supreme
4. In the circumstances, it
is considered advisable to clarify that nothing contained in the earlier
letter should be construed as authorizing the exclusion of any ship demurrage
charges paid which are required to be included in the assessable value of goods
under Section 14 of the Customs Act, 1962 interalia by virtue of Rule 9(2) of
the Customs Valuation Rules 1988.
The earlier letter dated 14.8.1991 referred in para 1 supra shall stand
Under Secretary to the Government of India