Valuation of Special Packing

According to Circulars issued by boards the concept of Transaction Value doesn’t allow any abatement on account of Special Packing. Please refer the below the summarized portion of circular no 354/81/2000-TRU, dated 30-6-2000.

It may be pertinent to note that Section 4 does not make any specific reference to packing charges. This does not mean that charges relating to packing will not form part of assessable value. As per commercial practice, the price for the goods charged, normally includes the cost of packing charges. However, at times separate charge may be billed for special packing, as per customer’s requirements. As any charges recovered for packing are charges recovered in relation to the sale of the goods, it will form part of the transaction value of the goods. In short, it is immaterial whether packing is ordinary or special. Whatever amount is charged from the buyer for packing and if not already included by the assessee in the price payable for the goods will be included while determining the transaction value of the goods for assessment to duty. The definition of “transaction value” makes it clear that all the elements of cost which the assessee incurred till the sale/marketing as aforesaid; continue to be included in the assessable value even under new section 4.

The above was reiterated by board’s circular No. 643/34/2002-CX., dated 1-7-2002. Hence it is better and safe to include the charges of Special packing in the assessable value.

However, if Special Packing is not necessary to make the goods marketable and solely done at instance of the customer and there is an agreement for return such durable / special packing material, you may choose to exclude its cost.