Additional Customs Duty (CVD) on import of Readymade Garments – CBEC Clarifies
BOARD vide Circular No. dated 21-10-2008 clarified that for the purpose of uniformity in assessment, the additional duty of Customs (CVD) is chargeable on import of readymade garments on the basis of transaction value i.e. C.I.F. price plus landing charges and not on the basis of R.S.P./ M.R.P.
However, w.e.f 19-08-2009 a proviso has been inserted in Section 3(2) of the Customs Tariff Act, 1975 vide Section 93 of the Finance Act 2009 which reads as “Provided further that in the case of an article imported into India, where the Central Government has fixed a tariff value for the like article produced or manufactured in India under sub-section (2) of Section 3 of the Central Excise Act, 1944, the value of the imported article shall be deemed to be such tariff value.
Thus Board's Circular No. dated 21.10.2008 has lost its relevance w.e.f 19.08.2009. But then there used to be a belief that Board Circulars are binding – though the lower level officers have scant respect for them.
Anyway, now the Board has clarified that for the purpose of uniformity in assessment , the additional duty of Customs (CVD) is chargeable on import of such readymade garments on the basis of their R.S.P./ M.R.P. But isn't it the legal position; is there any other way the assessment can be done and should the Board clarify the position for the purpose of uniformity in assessment? And this position is clarified almost a year after the Law was amended.
Will the importers be now stuck with SCNs alleging fraud and suppression for the officers following the Board Circular?. Why was this issue not clarified in the TRU DO letter immediately after the Budget? Maybe the earlier circular was issued by another section in the Board and TRU was not aware of the Circular.
CBEC CIRCULAR NO. 12/2010-Cus., Dated: June 21, 2010