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When Customs duty is payable ad valorem on the transaction value, Revenue cannot demand higher Customs duty because the actual quantity imported happened to be more than what was billed by the supplier, if such increase was innate to nature of the product, the Central Excise, Customs and Service Tax Appellate Tribunal held.
Furnace oil imported
The Collector of Customs (Preventive), Jamnagar, contended that Gujarat Ambuja Cements Ltd, which had imported a consignment of furnace oil, is liable to pay Customs duty on the value derived by multiplying the unit price indicated in the invoice for imported supply with the actual quantity observed at the port of entry into India.
The Customs department contended that while the duty indeed was payable on the transaction value, the assessee had received greater quantities, if one considered the lower density of the furnace oil received (higher volume), as opposed to the higher density (lower volume), at which it was invoiced.
If the quantity received increased vis-à-vis the quantity paid for gratuitously, due to the product’s innate nature, it was not the fault of the assessee, especially where tax was payable on the transaction value, the Tribunal held.
(The author is a New Delhi-based chartered accountant.)
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