1981 (9) TMI 116 - HC - Customs

Evidence - Delayed submission - Valuation - Addition for margin of profit - Demand - Relevant date

Summary

Issues:
1. Valuation of imported goods for customs duty assessment.
2. Admissibility of evidence to establish profit margin in invoice value.
3. Legality of demand notice served by customs authorities.

Detailed Analysis:

Issue 1: Valuation of imported goods for customs duty assessment
The case involved a dispute regarding the valuation of imported machinery for customs duty assessment. The Assistant Collector proposed to load the invoice price by 15% under the Customs Valuation Rules due to the absence of a profit margin. The petitioners failed to provide evidence to establish the correct profit margin, leading to the Assistant Collector passing an order in 1972. The appellate and revisional authorities upheld this decision, considering the lack of evidence. The loading of the invoice value by 15% was deemed justified under Rule 8 of the Customs Valuation Rules, as the petitioners did not submit any evidence to determine the value under Rule 3. The court found that the authorities' decisions were in accordance with the law and did not warrant interference.

Issue 2: Admissibility of evidence to establish profit margin in invoice value
The petitioners produced a clarification from auditors in 1972, stating that the invoice price included a normal profit margin. However, this clarification was obtained after the Assistant Collector's order and did not refer to the earlier certificate issued by the auditors in 1971. The court deemed this clarification as an afterthought to overcome the adverse order passed by the Assistant Collector. The appellate authorities rightfully ignored this clarification, as the original certificate clearly indicated a nil profit margin. The court held that the auditors' unfamiliarity with the English language was not a valid reason for disregarding the original certificate. The submission that the authorities erred in not considering the clarification was deemed devoid of merit.

Issue 3: Legality of demand notice served by customs authorities
The petitioners argued that the demand notice served in 1977 was barred by limitation under Section 28 of the Customs Act. However, the court ruled that the demand notice was not in relation to duty not levied or short-levied but to enforce duty found payable at the time of final assessment. Section 28 did not impose a limitation for recovery of duty found payable at the time of final assessment. The court held that the demand notice was not barred by limitation and dismissed the petition challenging the legality of the customs authorities' orders and the demand notice.

In conclusion, the court found no merit in the petitioners' contentions and discharged the rule with costs, allowing the respondents to recover the amount mentioned in the demand notice.