Ad valorem customs valuation turns on transaction value, while demurrage, refund handling and pre-July 2006 interest are limited by statute.

In an ad valorem customs regime, duty was chargeable on the transaction value actually paid or payable for the bill of lading quantity, not on shore tank receipt quantity, though NCCD was to be computed on actual quantity received. Ship demurrage charges were not includible in assessable value for the pre-2007 period. Cross-adjustment between short payment in one bill of entry and excess payment in another was impermissible, and separate refund claims were required. Refunds arising from finalisation of provisional assessment remained subject to unjust enrichment. Interest could not be levied for periods before July 2006.

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Issues: (i) Whether, in an ad valorem regime, duty was to be levied on the transaction value paid or payable or on the shore tank receipt quantity; (ii) whether ship demurrage charges were includible in the assessable value; (iii) whether short payment in one bill of entry could be adjusted against excess payment in another and whether separate refund claims were required; (iv) whether unjust enrichment applied to refunds arising from finalisation of provisional assessments; (v) whether interest could be levied for the period prior to July 2006 on finalisation of provisional assessments.

Issue (i): Whether, in an ad valorem regime, duty was to be levied on the transaction value paid or payable or on the shore tank receipt quantity.

Analysis: The duty regime during the material period was ad valorem, and the importer was bound to pay the agreed price for the bill of lading quantity without reduction for transit or ocean losses. The earlier decisions relied upon by the importer were distinguished because they arose in a different factual and legal setting. The governing principle was that, where price is actually paid or payable on the bill of lading quantity, that amount constitutes the transaction value for customs purposes notwithstanding the quantity physically received in shore tanks.

Conclusion: The issue was answered in favour of Revenue. Duty was payable on transaction value and not on shore tank receipt quantity, except in relation to specific-rate NCCD duty, which had to be computed on the actual quantity received.

Issue (ii): Whether ship demurrage charges were includible in the assessable value.

Analysis: The later valuation rules expressly included such charges, and the Larger Bench view held that the pre-2007 regime did not contain a comparable inclusion. Since the period in dispute was prior to the 2007 valuation rules, demurrage charges were not part of the assessable value.

Conclusion: The issue was answered in favour of the Assessee. Ship demurrage charges were not includible in the assessable value for the period involved.

Issue (iii): Whether short payment in one bill of entry could be adjusted against excess payment in another and whether separate refund claims were required.

Analysis: Finalisation of provisional assessment requires each bill of entry to be dealt with on its own footing. Excess payment in one set of clearances cannot be netted against short payment in another set. The proper course is to discharge the short-paid duty and pursue refund separately for excess payment, subject to the applicable statutory controls.

Conclusion: The issue was answered in favour of Revenue. Cross-adjustment was impermissible and separate refund claims were required.

Issue (iv): Whether unjust enrichment applied to refunds arising from finalisation of provisional assessments.

Analysis: Refund arising on finalisation of provisional assessment remains subject to the customs refund regime, and the doctrine of unjust enrichment applies unless the statutory requirements are satisfied. The final assessment and any refund flowing from it cannot escape that doctrine merely because the original assessment was provisional.

Conclusion: The issue was answered in favour of Revenue. Unjust enrichment applied to such refunds.

Issue (v): Whether interest could be levied for the period prior to July 2006 on finalisation of provisional assessments.

Analysis: Interest on differential duty is a substantive levy and cannot be imposed for the period before the statutory provision enabling such levy came into force. For imports finalised before that date, no interest liability could be fastened for the earlier period.

Conclusion: The issue was answered in favour of the Assessee. No interest was payable prior to July 2006.

Final Conclusion: The assessment was required to be recomputed in accordance with the above issue-wise determinations, with demurrage excluded for the relevant period, NCCD computed on actual quantity, refund claims examined separately under the law of unjust enrichment, and no pre-July 2006 interest levied.

Ratio Decidendi: In an ad valorem customs regime, where the importer pays the agreed price for the bill of lading quantity, customs duty is chargeable on transaction value rather than shore tank receipt quantity, while refund arising from finalisation of provisional assessment remains subject to unjust enrichment and pre-statute interest cannot be imposed.

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