Customs duty demand fails without proof of undervaluation or challenge to self-assessed Bills of Entry

Differential customs duty on imported cement was found unsustainable where the Revenue relied only on higher MRPs shown for consignments imported through different land ports. The variation in MRP was attributable to different lots and ports, and MRP was recognised as depending on factors beyond landing cost and duty; in the absence of evidence of same-sale pricing or suppression of value, undervaluation was not established. The demand also failed because the self-assessed Bills of Entry had not been challenged or modified through proper proceedings before recovery was sought. On both grounds, the impugned demand was set aside.

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Issues: (i) Whether the demand of differential customs duty based on alleged undervaluation of imported cement was sustainable when the goods were imported through different land ports and bore different declared MRPs. (ii) Whether differential duty could be demanded without first challenging the self-assessment of the Bills of Entry.

Issue (i): Whether the demand of differential customs duty based on alleged undervaluation of imported cement was sustainable when the goods were imported through different land ports and bore different declared MRPs.

Analysis: The difference in declared MRP was explained by the fact that the consignments were imported through different ports and represented different lots. MRP depends on multiple factors, not merely landing cost and duty element. In the absence of evidence that the goods were sold at the same price or that the appellant suppressed value, the higher MRP in other imports could not by itself establish undervaluation.

Conclusion: The demand based on undervaluation was not sustainable and was against the Revenue.

Issue (ii): Whether differential duty could be demanded without first challenging the self-assessment of the Bills of Entry.

Analysis: The self-assessed Bills of Entry were not challenged by the department. The governing principle applied was that an assessment, including self-assessment, must be modified through appropriate proceedings before further duty liability can be fastened or recovered. A demand proceeding cannot bypass the finality of the original assessment.

Conclusion: The demand could not be sustained without first setting aside or modifying the self-assessment, and this issue was in favour of the appellant.

Final Conclusion: The impugned order was set aside and the appeals were allowed, as neither the alleged undervaluation nor the unchallenged self-assessment could support the duty demand.

Ratio Decidendi: Differential customs duty cannot be sustained on mere comparison of MRPs of different consignments imported through different ports, and a demand cannot be raised without first challenging the final self-assessment in accordance with law.

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