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Issues: (i) whether the freight element could be added to the assessable value of the imported goods and the importer was entitled to the benefit of the EPCG notification to the extent of the licence value; (ii) whether the demand under section 28 was sustainable and the extended period of limitation could be invoked; (iii) whether the goods, though already cleared, could be ordered to be confiscated with redemption fine.
Issue (i): whether the freight element could be added to the assessable value of the imported goods and the importer was entitled to the benefit of the EPCG notification to the extent of the licence value.
Analysis: The value of imported goods under section 14 of the Customs Act is required to include the cost of transport. Rule 9(2) of the Customs Valuation Rules permits the notional computation of freight at 20% of FOB value only when the actual cost of transport is not ascertainable. On the facts, the freight arrangement with the logistics provider showed that the transport cost was ascertainable, and the importer had paid substantially more freight than what was included in the bills of entry. The higher assessable value was therefore liable to be taken into account, and the EPCG benefit could not be denied merely because the enhanced value was not originally declared, so long as the licence covered the enhanced value.
Conclusion: The freight element was required to be included in the assessable value, and the EPCG benefit remained available to the extent of the licence value, in favour of the assessee.
Issue (ii): whether the demand under section 28 was sustainable and the extended period of limitation could be invoked.
Analysis: A demand under section 28 is not barred merely because the original assessment was not separately challenged. The material showed that only part of the freight actually paid had been included in the assessable value, while the balance had been omitted despite the contractual terms making the freight structure clear. The omission was treated as a deliberate device resulting in suppression of the correct value.
Conclusion: The demand under section 28 was maintainable and the extended period of limitation was rightly invoked, against the assessee.
Issue (iii): whether the goods, though already cleared, could be ordered to be confiscated with redemption fine.
Analysis: Confiscation and redemption fine were considered on the footing of the bond executed at clearance. The bond in this case was not a bond for provisional release of seized goods but a bond linked to fulfillment of export obligation under the EPCG regime. The precedent dealing with goods released against a bond after seizure was held inapplicable, and the mere fact that the goods were liable to confiscation did not justify ordering confiscation in the present facts.
Conclusion: Confiscation and redemption fine were not sustainable, in favour of the assessee.
Final Conclusion: The valuation and limitation findings were sustained, but the order of confiscation and redemption fine was set aside, resulting in only partial relief to the assessee.
Ratio Decidendi: Freight can be computed on a notional basis only when the actual transport cost is not ascertainable, and goods already cleared in regular course cannot be ordered confiscated merely because they are liable to confiscation where the bond is not one for provisional release of seized goods.
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