Customs valuation of imported yarn must follow its condition at import, not post-texturisation denierage.

Additional duty of customs on partially oriented yarn had to be assessed by reference to the goods' condition at the time of import and warehousing, not by the denierage reached after later texturisation. The subsequent manufacturing process did not change the customs valuation basis for the imported yarn, even though excise duty could arise on the texturised product. On that reasoning, the demand for additional duty calculated on post-texturisation denierage was not sustainable and the assessee's contention succeeded.

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Issues: Whether additional duty of customs on partially oriented yarn was leviable on the basis of its denierage at the time of import and warehousing, or on the basis of its denierage after subsequent texturisation.

Analysis: Customs duty, including additional duty of customs, is chargeable with reference to the condition of the goods at the time of import into the country. The later process of texturisation did not alter the basis on which the imported partially oriented yarn had to be assessed for customs purposes. Although excise duty could be attracted on the texturised yarn manufactured from the imported goods, that did not support a corresponding enhancement of the additional duty of customs on the imported goods by reference to their post-import texturised denierage.

Conclusion: The additional duty of customs was not payable on the basis of denierage after texturisation; the assessee's contention was accepted and the demand failed.

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