Dispatch money is deductible from customs assessable value, and refund rejection cannot rest on grounds outside the notice.

Dispatch money earned for quicker unloading was treated as a freight-related rebate deductible from the customs assessable value, supporting the refund claim. The Tribunal also held that the appellate authority could not uphold rejection of the refund on a ground not contained in the show-cause notice or the adjudication order. As the notice was confined to valuation issues and deduction of dispatch money, the refund could not be denied on an extraneous basis. The deduction was therefore accepted and the rejection of refund was unsustainable.

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Issues: Whether refund of customs duty could be allowed by deducting dispatch money from the assessable value, and whether the appellate authority could reject the refund claim on a ground not forming part of the show-cause notice or adjudication.

Analysis: The refund claim was founded on dispatch money earned for quick unloading of the vessel, which was treated as a component affecting the assessable value. The order under challenge had been sustained by relying on the principle that an assessment not separately challenged would bar refund, but that basis was not part of the notice or the adjudication proceedings. The stated grounds in the notice were confined to the scope of valuation rules and the admissibility of deduction of dispatch money. The Tribunal held that the appellate authority had travelled beyond the scope of the show-cause notice. It further followed earlier decisions recognising that where freight or transport cost forms part of assessable value, a rebate or dispatch money linked to quicker unloading can be deducted, and that the benefit of efficiency should accrue to the assessee.

Conclusion: The refund claim was maintainable and dispatch money was deductible from the assessable value. The rejection of refund was unsustainable.

Ratio Decidendi: An appellate authority cannot sustain rejection of a refund claim on a ground not contained in the show-cause notice or adjudication, and dispatch money earned as a freight-related rebate is deductible from the assessable value for customs valuation purposes.

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