Valuation of demo cars: comparable market price applied for duty, while penalties were deleted on the facts.

Demo cars used for test drives and to improve marketability were treated as comparable to regular cars where no meaningful distinction was shown, so valuation on the declared transaction value was rejected and the price of other cars was adopted for duty computation. Interest on the duty demand was sustained. Penalties were held unwarranted because duty had been paid on the transaction value and the demand was within the normal limitation period, so the appeals succeeded only to the extent of deletion of penalties.

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Issues: Whether duty on demo cars was to be assessed on the declared transaction value or on the comparable price of other cars, and whether penalties were exigible.

Analysis: The demo cars were used for test drives and for prospective buyers' use to improve marketability, and no material distinction between demo cars and normal cars sold through dealers was shown. On that basis, the declared transaction value was not accepted and the price of other cars was properly adopted for duty computation. As the assessees had received and paid duty on the transaction value and the demand was within the normal period of limitation, penalty was found unwarranted.

Conclusion: Duty demand with interest was upheld, but the penalties were set aside.

Final Conclusion: The appeals succeeded only to the extent of deletion of penalties, while the duty liability and interest were sustained.

Ratio Decidendi: Where goods sold as demo units are shown to be used for test and marketability purposes without a meaningful distinction from regular goods, comparable price may be adopted for valuation; penalty is not warranted when duty was paid on transaction value and the demand falls within the normal period of limitation.

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