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COPY OF CUSTOMS CIRCULAR
NO. 74/2002
Dated 8th November 2002
Deduction of Air Freight element from F.O.B value - regarding
1. Apparel Export Promotion council (AEPC) has represented that Customs authorities have initiated recovery proceedings in respect of certain garments exporters on the premise that they have wrongly availed excess drawback on consignments, on the F.O.B value including the element of air freight which otherwise merited deduction.
2. 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 thus contended that there is no wrongful availment of drawback.
3. 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 be justified to re-work the drawback amount by deducting the freight elements from the contracted F.O.B value.
4. This applies to all kinds of commodities. All pending cases of the parties may be decided accordingly.
5. suitable public notices for information of the trade and standing orders for guidance of the staff may kindly be issued accordingly
Sd/-
(S S Renjhen)
Joint Secretary to the Govt. of India
F.No. 609 / 37 / 99-DBK
Dated: 8th November 2002
Issued by:
Ministry of Finance
Department of Revenue
New Delhi
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