Legal principle

Once an exemption notification is withdrawn, the value of materials supplied free of cost must be included in the assessable value under Rule 9(1)(b)(i) of the Customs Valuation Rules, 1988, and an appellate challenge to the resulting finalized assessment fails if pleaded only on generic, unsubstantiated grounds.

Court decision

The Tribunal found no reason to interfere with the order finalizing the assessment: it held the department's grounds were mere surmises with no specific point to negate the differential-duty calculation, sustained the impugned orders, and dismissed the department's appeal — the de novo assessment of Rs.3,72,25,043 stands in the respondent importer's favour.

Facts

M/s Tamilnadu Petroproducts Ltd imported 15 consignments of Pacol Catalyst during 1994-95, in which the foreign supplier incorporated sponge platinum retrieved, free of cost, from spent catalysts earlier exported by the importer. Because the value of this free-of-cost platinum sponge was disputed, the Bills of Entry were assessed provisionally under Section 18(1) of the Customs Act, 1962 on bond with bank guarantee, pending determination under Section 14(1) read with the Customs Valuation Rules, 1988. After Notification 296/92-Cus (exempting the retrieved platinum sponge value) was withdrawn from 01.03.1994 and no retrospective or Section 28A relief notification issued, the provisional assessments were finalized demanding differential duty of about Rs.4.46 crore, reduced to Rs.3,72,25,043 in de novo adjudication following remand by Commissioner (Appeals). The department's appeal against that de novo order was rejected by Commissioner (Appeals), bringing the department to the Tribunal.

Key provisions

• Section 28A, Customs Act, 1962 —  Power not to recover duties not levied or short-levied as a result of general practice
• Section 14(1), Customs Act, 1962 — Valuation of goods
• Section 18(1), Customs Act, 1962 — Provisional assessment of duty