Declared and verified exempt goods cannot be reassessed under residual entry tax powers; steel scrap exemption applied.

Goods declared at entry, verified at the check-post, and endorsed as exempt were treated as steel scrap, not rejected axle materials, so they fell within the nil-tax exemption for steel scrap and were not liable to entry tax. Because declarations were furnished and verification was completed, the residual reassessment power under section 14(3) could not be used to reopen the matter or raise a fresh demand. The statutory scheme required the authority to proceed within the declaration-and-verification framework, and the later demand notice was therefore illegal and quashed.

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Issues: (i) whether the goods brought into the Calcutta Metropolitan Area were steel scrap entitled to exemption under the relevant notification, or were taxable as rejected axle materials under the Schedule to the Act; (ii) whether, after declaration under section 13 and verification at the check-post, the prescribed authority could validly invoke section 14(3) to reassess and demand entry tax.

Issue (i): whether the goods brought into the Calcutta Metropolitan Area were steel scrap entitled to exemption under the relevant notification, or were taxable as rejected axle materials under the Schedule to the Act.

Analysis: The invoices described the goods as rejected axle full length/fully/partly machined, but the declarations in form IV, the check-post endorsement, the materials produced at the hearing, and the revised price circular showed that the goods were treated as steel scrap. The exemption notification granted nil tax to steel scrap, and the material on record did not support classification of the goods for taxation under the cited schedule entry.

Conclusion: The goods were held to be steel scrap and were not liable to entry tax.

Issue (ii): whether, after declaration under section 13 and verification at the check-post, the prescribed authority could validly invoke section 14(3) to reassess and demand entry tax.

Analysis: Section 13 requires declaration before entry, section 14(1) governs cases where declaration is made and verification is undertaken, section 14(2) applies where declaration is omitted or failed, and section 14(3) applies to goods brought in without payment of tax in circumstances not covered by the other two sub-sections. Since declarations were submitted and the goods were verified and endorsed as exempt at the check-post, the later resort to section 14(3) was inconsistent with the statutory scheme. The subsequent demand was therefore unsupported by the Act.

Conclusion: The proceeding under section 14(3) and the demand notice were held to be illegal.

Final Conclusion: The application succeeded, the tax demand was quashed, and the relief granted followed from the statutory exemption and the impermissibility of reassessment under section 14(3) on the facts found.

Ratio Decidendi: Where goods are declared at entry, verified and endorsed as exempt by the prescribed authority, a later demand under the residual reassessment provision cannot be sustained, and goods covered by a nil-tax exemption notification are not chargeable to entry tax.

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