F.No. S/10-390/2002 DBK
Date : 27.11.02

PUBLIC NOTICE NO. 144/2002

Deduction of Air Freight element from f.o.b. value – reg.

Attention of all Exporters / CHA’s is invited to the Ministry’s Circular No. 74/2002- Cus issued under F.No. 609/37/99-DBK dated 08.11.2002 on the above subject reproduced below.

2. Apparel Export Promotion Council (AEPC) has represented that Customs authorities have initiated recovery proceedings in respect of certain garment exporters on the premises that they have wrongfully availed excess drawback on consignments, on f.o.b. value including the element of air freight which otherwise merited deduction.

3. AEPC on the contrary has asserted that the contracts / LC have been on freight collect basis with the terms of shipment by sea. However, in few cases only, due to production constraints and other unavoidable circumstances, the exporters were compelled to airlift the shipments and have borne the air freight independently without affecting the f.o.b. value of the goods. AEPC has thus contended that there is no wrongful availment of drawback.

4. The issue has been examined. It is clarified that if the buyer and the seller have contracted the goods on f.o.b. basis and the same is reflected in the contract and the LC, it is immaterial that the exporter has shipped the goods by sea or by air. If the freight is on collect basis and the exporter is paying more as air freight due to the exigency of the situation without affecting the f.o.b., it would not be justified to re-work the drawback amount by deducting the freight elements from the contracted f.o.b. value.

5. This applies to all kinds of commodities. All pending cases of the parties may be decided accordingly.

All Drawback claims shall be decided accorrdingly.

Sd/- (27.11.02)
(SHISHIRKUMAR)
COMMISSIONER OF CUSTOMS (EP)
MUMBAI.

F.No. S/10-390/2002 DBK

(Issued on the basis of Ministry’s Circular No. 74/2002-Customs issued under F.No. 609/37/99-DBK dated 08.11.2002 Govt. of India, Ministry of Finance, Department of Revenue.)

Sd/-
( T.D. BODADE)
DY. COMMISSIONER OF CUSTOMS
DRAWBACK DEPARTMENT
MUMBAI.

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