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Issues involved: Assessment of additional duty of Customs on imported diesel engine set, application of Section 19 of the Customs Act, benefit of exemption notifications.
Assessment of additional duty: The respondent imported a diesel engine set with a specified price breakdown for the engine and alternator. Customs Department assessed the set for additional duty under Tariff Item 68 and charged 8% ad valorem. The respondent claimed duty should be charged separately on each component and exemption notifications applied. Refund claim was rejected by Assistant Collector and appeal to Collector of Customs (Appeals) failed. Application of Section 19: Tribunal applied Section 19 of the Customs Act, determining that the diesel engine and generator should be separately assessed for duty with applicable exemption notifications. However, the Supreme Court clarified that Section 19 is not applicable to the assessment of additional duty under the Customs Tariff Act. The method of duty determination under Section 19 is specific to the Customs Act and does not apply to the assessment of additional duty. Benefit of exemption notifications: The Court emphasized that the imported set, as per the invoice, was the unit of assessment, not its components. Despite the set comprising a diesel engine and alternator, the assessment of additional duty was based on Tariff Item 68. The Court allowed the appeal, setting aside the Tribunal's order, and directed that the assessment of additional duty on the set should be regulated by the authorities below. Conclusion: The Supreme Court allowed the appeal, emphasizing that Section 19 of the Customs Act does not apply to the assessment of additional duty under the Customs Tariff Act. The assessment of duty on the imported diesel engine set was based on the set as a whole, not its individual components. The Court directed that the authorities below shall regulate the assessment of additional duty on the set. No costs were awarded in the matter.
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