Extra duty deposit reduced to 1% where 5% demand lacked justification and earlier valuation acceptance existed.

An extra duty deposit of 5% was not justified where the appeal before the Commissioner (Appeals) concerned royalty addition and the record showed prior acceptance of the transaction value by the special valuation branch. Board Circular No. 11/2001 contemplated a 1% deposit, with enhancement to 5% only if the importer failed to furnish a complete reply to the questionnaire within 30 days. On that basis, interim relief was granted by limiting the deposit to 1% pending disposal of the appeal.

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Issues: Whether the direction to collect 5% extra duty deposit was justified, and whether the importer was entitled to interim relief restricting the deposit to 1% pending disposal of the appeal.

Analysis: The appeal before the Commissioner (Appeals) was confined to the issue of royalty addition, while the impugned order also directed recovery of 5% extra duty deposit. Board's Circular No. 11/2001 dated 23.02.2001 provided that extra duty deposit would ordinarily be kept at 1%, and enhancement to 5% was contemplated only where the importer failed to furnish a complete reply to the questionnaire within 30 days. The record showed repeated acceptance of the transaction value by the special valuation branch in earlier orders, and no sufficient justification was found for insisting on 5% deposit in the present case.

Conclusion: The direction to collect 5% extra duty deposit was not sustained, and interim relief was granted by limiting the deposit to 1% until disposal of the appeal.

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