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M/s Coal India Ltd. v. Commissioner of Customs (Port), Kolkata

Civil Appeal · 2025 INSC 609Decided 1 May 2025
C.A. No.-008028-008028 - 2010
Justice Abhay S. Oka · Justice Ujjal Bhuyan

Background

Coal India's subsidiary, Central Coalfields Limited, imported spare parts for heavy mining shovels from a US supplier, Harnischfeger Corporation, through its Indian distributor, Voltas Limited. Under the purchase terms, Voltas was separately paid an 8% "engineering and technical service fee" (on the FOB value) for ongoing product-support services like site inspections, technical guidance and assistance with customs clearance. The customs authorities included this service fee in the assessable value of the imported goods for levying customs duty, and this was upheld by the Commissioner (Appeals) and the CESTAT, leading to this appeal.

Decision Breakdown

The Supreme Court examined Section 14 of the Customs Act and the Customs Valuation Rules, 1988, particularly Rule 9(1)(e) which requires adding to the price any other payment made as a condition of sale for the imported goods. It held that because the product-support services by Voltas (the Indian agent) were directly and contractually tied to the import transaction - not independent post-importation services - the 8% fee was correctly included in the value for customs duty. Finding no error in the concurrent findings of the lower authorities, the Court dismissed the appeal.

Lesson Learnt

Payments to a local agent for services connected to and required as part of an import transaction (such as ongoing product support tied to the purchase contract) can be added to the value of imported goods for customs duty, even if paid separately from the price of the goods themselves.

Official source (sci.gov.in)View Judgment (PDF)

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