ST.

JOSEPH’S COLLEGE OF LAW

BENGALURU-560025

LAW OF TAXATION
ASSINGMENT

COMMISSIOR OF CUSTOMS vs
TOPIC:
AGGARWAL INDUSTRIES

SUBMITTED BY,
Name: RITHVIK BALANAGRAJ. B
Class: IV BBA.LLB
Reg.no: 18446
SUBMITTED TO,
NAME: prof: MOSES RAJ
DEPT: LAW OF TAXATION

TABLE OF CONTENTS

1|Page
 S.NO TOPIC PAGE
1. INTRODUCTION 3
2. CUSTOMARY DUTY IN INDIA 4
3. LEGAL PROVISIONS FOR VALUATION UNDER 5,6
CUSTOMS ACT,1962
4. VALUATION of products UNDER THE CUSTOMS 6
ACT
5. TRANSACTION VALUE 7
6. CONVERSION DATES 8
7. CURRENCY CONVERSION RATE 9
8. IMPORTANT CASE LAWS 9
9. CONCLUSION 10
10. BIBILIOGRAPHY 11

COMMISSIOR OF CUSTOMS vs AGGARWAL

INDUSTRIES:

INTRODUCTION:

Custom is essentially any authority or a collection wing that was appointed by the govt. it's
obligatory in every and each country for dominant and assembling taxes of products that
square measure flowing into and out of the country. “Customs duty basically means or refers
to the tax obligatory on the products once they transported across the international borders
that's from one country to the opposite”. it's associate degree taxation, that is obligatory
below the customs act developed in 1962.

2|Page
Following are the customary duty types in India:
 BCD which stands for the basic customs duty.
 CVD which stands for the countervailing duty.
 The additional customs duty or special CVD.
 Protective duty
 Anti-dumping duty

CASE DETAILS:

In the case of the commissioner of customs vs Aggarwal industries limited, the importer that's the
person importing going in a contract for supplying of crude edible seed oil U.S of dollar 435. C.I.F
OR MT. in this contract, the products or the consignment were to be shipped 5th august, 2011 at the
agreed value. Meanwhile, the international level costs had gone up because of or due to the volatility
within the market, and other imports held or happened during august 2011, were at higher prices.
Department sought to extend the assessable values on the idea of the upper prices as contemporaneous
imports. The court held that the department view isn't correct. it's true that the commodity involved
had volatile changings or fluctuations in its price within the international markets, but having delayed
the shipment; the supplier failed to even increase the value of the products or the commodity even
after the rise in its price within the international market. There was no allegation of the supplier and
therefore the importer being in connection or collusion. Thus, the appeal was allowed within the
favour of the respondent-assessee.

CUSTOMARY DUTY IN INDIA:

Following square measure, the kinds of customs duty in India:

* Basic customs (BCD)
* Tariff (CVD)
* Extra customs or special CVD
* Protecting duty
* Protective tariff
The power to enact the law is given below article 265 of the Indian constitution. The primary
objective behind implementing this practice duty is to safeguard and defend each nation’s
economy, jobs, folks, and their surroundings that's their surroundings, and then on.
By controlling and dominant the movement of products in and out of any country. it's
additionally to scale back or minimize the importation and transport of prohibited medicine

3|Page
like cigarettes and alcoholic beverages across the international borders since these things
square measure sometimes high taxed and their tax rates may additionally vary and take issue
considerably across the international borders.
The quantum of customs in Asian countries depends on the provisions of the custom act 1962
and customs tariff act, 1975 and connected custom rules and rules, notifications, circulars,
case laws, and annual union finance acts. The customs act could be a principal act that
controls and governs the entry and exit of various classes of vessels, aircraft, machineries,
products and services similarly because of the passengers and then on into or outside the
country. The act extends to the entire Asian country.

LEGAL PROVISIONS FOR VALUATION UNDER CUSTOMS

ACT,1962:

Section 2(41) of the customs act, 1962 defines “value” about any goods that
mean thereof which determined according to with the subsection and its provisions which
comes under subsection (1) of sec 14 thereof. In the subsection (1) of section 14 states that
when a duty of customs is chargeable on any goods by reference to their value or anything,
then that value of those goods can be redeemed as:
‘The price at which any or such like goods that are ordinally sold, or in the offer or if offered
to sale, for the delivery at the time and the place of importation or any exportation, as the case
may be or in the course of time of an international trade in where the seller, as well as buyer,
have no interest in the business of each other and then the price is the sole and full
consideration for the sale or offer for sale.’
The provisions of subsection (1) of section 14 of our Indian constitution are applied for the
valuation of both imported goods and export goods. However, a common valuation law at the
international applies to the imported goods, and its basic principles are given down in Article
VII of the general agreement on the tariffs and trades (GATT), 1948, currently known as
GATT 1994 (administered by the WTO). The Indian valuation law under section 14(!) of the
Indian customs act is based on the principles of Article VII of the GATT.
This is however a clear and deemed value allowing the loading or the uplifting of a declared
value in a given case in which it represents the actual price of the transaction. The agreement
on customs valuation (ACV), which had come into force on 1st January 1981, lays down a
very well clearly defined methods of the valuation which to be strictly followed to make sure
that is to ensure the surety and the certainty in the valuation that is approached and to avoid
any abnormalities and arbitrariness.
Subsection 1A OF THE INDIAN CUSTOMS ACT, 1962 demands and requires that the
value of the imported goods shall be determined under the rule which is made on this behalf.
The customs valuation (DETERMINATION OF PRICE AND ALSO THE IMPORTED
GOODS) rules, 1988 which peacefully lays down the goods which have been imported, and
the methods of the valuation are based on the valuation of ACV.

4|Page
The transaction value is the price that is paid or payable in the future for the goods that are
imported, it is the primary basis for valuation. If the transaction method is not applicable for a
specific case, then the other or the alternative methods of valuation prescribed in the rules
(which are based on ACV) have and must be followed in a hierarchical order, subject to
certain exceptions.
Under the customs act,1962 the central government has also been very much empowered to
fix tariff values for any product. If the tariff value is fully fixed for any of the goods, then ad-
valorem duties are ought to be calculated concerning such tariff values. The tariff value must
be fixed for any type and class of imported as well as exported goods having regard to the
trend of value of such or the goods like them and the same has to be notified or informed in
the official gazette.
As far as the exporting goods are concerned, provisions of subsection (1) of section 14
provide and give the complete and clear code of the valuation by itself and there are no other
separate valuation rules for that purpose.

VALUATION of products UNDER THE CUSTOMS ACT, 1962:

Section 14 of the customs act, 1962 prescribes the mode and therefore the way of
identifying and knowing the worth of the products that are imported or exported during which
the most purpose is the payment of the customs duty.
The provisions of section 14 are discussed below:

TRANSACTION VALUE:
Subsection (1) of section 14 of the Indian custom act lays down
that for the aim of the customs tariff act, 1975, or the other law that the time is being
effective, the worth of the products that are imported also as exported that shall the
transaction value of these goods. If we soak up the case of the exported goods, the transaction
value shall be the worth actually and originally paid or are paid within the future (payable)
for the products when within the time the nice is sold or exported from India for delivery at
the time and place of exporting or exportation where the client and seller of the products
aren't related that's having no relation and also the price is that the sole consideration for the
sale.
However, further conditions may be laid out in the principles that are made on their behalf.
In case of the imported goods, the transaction value shall be within the price itself which is
truly paid or payable which is to be tired the long run for the products when sold for export to
India for delivery at the time and place of importing or importation where the customer
moreover because the seller of the products is here not in the slightest degree related and here
also the value is that the sole consideration for the sale.

5|Page
However, during this case also the further condition may be given or laid out in the
foundations made during this behalf. Such transaction value shall also include within the
addition to the worth or the quantity as said above, any amount of money paid or payable
may be within the future for the prices and services, including:
 Commissions and brokerage
 Engineering
 Design work
 Royalties and license fees, 
 price of the transport to the place of importation
  Insurance
 Loading
 Unloading and
 Handling charges.

To the extent and within the manner and also the regulations per the foundations made during
this behalf.

Such rules may provide and show for:

(A) The circumstances and a situation within which the customer still
because the seller is related, shall be deemed and related
(B) The manner of the determination of the worth in respect of the
products within which there's on sale, or the client further because the seller is related, or
price isn't the only real and only consideration for the sale or in the other case.
(C) The manner and therefore the way of the acceptance or the
rejection useful declared by the importer or the exporter, because the case may be, where the
correct officer has the right reasons to doubt the reality or accuracy and precision of such
value and therefore the determination important for the needs mainly of this section.
These were some rules.

CONVERSION DATES:

For the products that are imported, the conversion in value shall be
finished reference and relating the speed of exchange which is extremely prevalent on the
date of filing the bill of each entry under section 46. within the case of the exported goods,

6|Page
the conversion in value shall be finished the relevance the speed of the exchange which is
prevalent on the case on the date of filing the shipping bill (that is that the vessel or the
aircraft) or the bill of the export (vehicle) under the section 50.
In the case of Samar timber corporation vs ACC, it had been held that the relevant date in
relevance the speed of the duty which is payable within the date of the presentation of a bill
of entry and not the date of the re-presentation after the correction.

CURRENCY CONVERSION RATE:

The speed of exchange is notified and revealed by the three
agencies:
A) The central board of excise and customs (board).
B) The banking company of India
C) The exchange dealers association of India. For the aim of
customs valuation, “rate of the exchange taking place”, means the speed of exchange
D) Determined by the board  Ascertained in such a fashion or
during a way that the board may direct for the conversation of the Indian currency into the
foreign currency or the other way around that's the foreign currency into the Indian currency.
Thus, for the aim of valuation under the law of the customs, rated and notified by the CBEC
board shall be taken into consideration. The CBEC notifies and informs the rates periodically,
generally every fortnight. There are separate and individual rates for imported goods (selling
rate) and export goods (buying rate).

TARIFF VALUE:
Subsection (2) of section 14 provides clearly that the board may fix
tariff values for any class and group of the imported also because the exported goods, having
regard to the trend useful of such goods or like goods by the notification given within the
official gazette providing it's satisfied that it's necessary to try and do so. Where any such
tariff values are fixed for real. Provisions of subsection (2) have more or an overriding effect
on the provisions of subsection (1).

IMPORTANT CASE LAWS:

Within the case of the commissioner of central excise, Mangalore refinery and
petrochemicals limited, revenue contented and received during this case that's the charge
payable to the owner of a chartered ship on failure to load or discharge the ship within the
time agreed and therefore the charges paid by the assesses are includible within the assessable
value for the levy of the customs duty.

7|Page
 The court decided the demurrage charges are incurred after the products when reaches the
Indian ports, thus it is a post Importing or importation event, which is relying on the case of
the commissioner of customs vs Essar steel limited the apex court has been holding the
demurrage charges are not includible in the assessable value of imported goods.

CONCLUSION:
Customs duty is considered to be an indirect tax that is not dealt with directly. It
is a tax on the goods and it is not the tax on the person having or owing or the owner of the
goods. The charge of tax is attached to the goods. Unless the tax liability or the liability of the
tax is discharged, the goods are not allowed for further proceeding or to proceed further. It is,
therefore, become necessary for the importer, who wishes or desires to take the clear or
clearance of the goods into town for home consumption, to discharge the duty liability. The
similarity in the case of baggage the passenger cannot take his goods unless the duty liability
is discharged.

BIBLIOGRAPHY:
1. https://bhattandjoshiassociates.com/valuations-of-custom-duty-
under-customs-act-1962/
2. https://indiankanoon.org/doc/449680/
3. https://www.casemine.com/judgement/in/
5ba0bcad60d03e57b21b331a

8|Page