WIPRO LTD. versus ASSISTANT COLLECTOR OF CUSTOMS & ORS.

Citation: [2015] 4 S.C.R. 640 · Decided: 16-04-2015 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
[2015] 4 S.C.R. 640 
WIPRO LTD. 
v. 
ASSISTANT COLLECTOR OF CUSTOMS & ORS. 
(Civil Appeal Nos. 9766-9775 of 2003) 
APRIL 16, 2015 
[A.K. SIKRI AND R. F. NARIMAN, JJ.] 
C 
Customs Valuation (Determination of Price of Imported 
Goods) Rules, 1988: r.9(2), proviso (ii) - Constitutional 
validity of - Impugned provision entitling authorities to add 
1 % of F 0. 8. value of goods on account of loading, unloading 
and handling charges - Held: This proviso, introduces fiction 
o as far as addition of cost of loading, unloading and handling 
charges is concerned even in those cases where actual cost 
paid on such an account is available and ascertainable - It 
is contrary to the provisions of s. 14 and would clearly be ultra 
vires this provision -
When the actual charges paid are 
E available and ascertainable, then introducing a fiction for 
arriving at the purported cost of loading, unloading and 
handling charges is clearly arbitrary with no nexus with the 
objectives sought to be achieved - It goes against the 
objective behind s. 14 namely to accept the actual cost paid 
F or payable and even in the absence thereof to arrive at the 
cost which is most proximate to the actual cost-Addition of 
1% of F.0.8. value is thus, in the circumstance, clearly 
arbitrary and irrational and would be violative of Article 14 of 
the Constitution - The said provision is not sustainable and 
G has to be read down to mean that the clause would apply 
only when actual charges are not ascertainable - Constitution 
· of India, 1950-Art. 14 - Customs Act, 1962 - s. 14. 
H 
640 
WIPRO LTD. v. ASSISTANT COLLECTOR OF CUSTOMS 641 
· Allowing the appeals, the Court 
HELD: 1.1. A conjoint reading of Rules 3 and 4 would 
make it clear that the value of the imported goods has to 
A 
be the transaction value and in those cases where 
transaction value cannot be determined, such a value is B 
to be determined by resorting to Rules 5 to 8 thereof in a 
sequential order. As per the formula contained in sub-
rule (1) of Rule 4, 'the authorities are to find out the price 
actually paid or payable for the goods when sold for 
exports to India, to arrive at the value of the goods. Once C 
this value is arrived at, it is to be adjusted in accordance 
with the provisions of Rule 9 of the said Rules. The final 
outcome, after such an adjustment made, is to be treated 
as transaction value to attract the import duty thereupon. 
As per Rule 5, in those cases where the transaction value D 
is indeterminable, transaction value of "identical goods" 
is to be taken into consideration. Rule 6 mentions about 
transaction value of "similar goods". If this is also 
inapplicable then "deductive value" is to be arrived at in 
terms of formula contained in Rule 7. If that is also E 
inapplicable, residual method is provided in Rule 8 which 
prescribes that the value shall be determined using 
"reasonable means" consistent with the principles of 
general provisions of these Rules and sub-section (1) 
F 
of Section 14 of the Customs Act. [Paras 5, 6] [647-H] 
[648-A-B, F-G] 
1.2. Once the transaction value is arrived at by 
applying the formula applicable in a given case in terms 
of aforesaid provision, exercise is still incomplete. G 
Adjustments to this value are still to be made in 
accordance with the provision of Rule 9. Rule 9 deals 
with "cost of services". It lays down that in determining 
the transactional value, cost of certain services is to be 
added to the price actually paid or payable for the H 
642 
SUPREME COURT REPORTS 
[2015] 4 S.C.R. 
A imported goods, as mentioned in clauses (a) to (e) of sub-
rule (1) of Rule 9. Rule 9 was amended in the year 1989 
and 1990. Clause (ii) of first proviso mandated addition 
of one per cent of the F.O.B. value of the goods plus the 
cost of transport referred to in clause (a) plus the cost of 
B insurance referred to in clause (c). In the present case, it 
was on the strength of this proviso, even when the actual 
handling charges were shown as Rs.69.98 paisa, that 
too as fixed by the International Airport Authority, the 
customs authorities added further sum of Rs.15,214.69 
C paisa to the value of goods of handling charges, being 
one per cent free on board value of the goods. The 
appellant was aggrieved by this addition and handling 
charges on notional basis pursuant to the said proviso. 
D [Paras 7 to 11] [649-E-G; 652-E; 654-B-E; 653-C] 
2. Scheme of customs duties as payable under the 
Act. The yardsticks 

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