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Issues: (i) Whether the assessable value for clearances by a 100% EOU to its DTA service centre could be based on the domestic resale price charged by the service centre, or whether the FOB/export price and transaction value could be accepted. (ii) Whether the demand was barred by limitation for want of suppression of facts, and whether penalty under Section 11AC was sustainable.
Issue (i): Whether the assessable value for clearances by a 100% EOU to its DTA service centre could be based on the domestic resale price charged by the service centre, or whether the FOB/export price and transaction value could be accepted.
Analysis: The circular governing valuation of goods cleared by 100% EOU units to DTA permits acceptance of invoice value where it represents transaction value and is consistent with the valuation rules. The record showed that the appellants had adopted FOB value comparable to export sales, and there was no sufficient material to establish that the relationship between buyer and seller had depressed the price. The domestic resale price charged by the service centre was not a proper basis for valuation under the Customs Act and the Customs Valuation Rules.
Conclusion: The domestic resale price could not be adopted as the assessable value, and the appellants' valuation was held to be proper.
Issue (ii): Whether the demand was barred by limitation for want of suppression of facts, and whether penalty under Section 11AC was sustainable.
Analysis: The appellants had disclosed the DTA clearances, obtained permissions, filed the relevant documents, and informed the departmental officers about the method of valuation. The materials on record showed that the department was aware of the clearances and the valuation basis much earlier than the show cause notice. In the absence of suppression, the extended period was unavailable, and the foundation for mandatory penalty also failed.
Conclusion: The demand was time-barred and the penalty under Section 11AC was not sustainable.
Final Conclusion: The valuation adopted by the appellants was accepted, the demand and penalty were set aside on limitation, and the assessee's appeal succeeded while the revenue's appeal failed.
Ratio Decidendi: For clearances by a 100% EOU to DTA, an export-linked invoice value may be accepted as assessable value where it reflects transaction value and there is no proof that related-party dealings influenced the price; the domestic resale price of the DTA buyer is not the proper basis, and extended limitation cannot be invoked without suppression of facts.
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