CIF valuation, MRP-based customs duty and limitation failed where evidence showed supplier-borne freight, bulk institutional supply and no suppression.
Where the overseas supplier bore freight and insurance and the shipment was supported by marine policy and invoice records, the import was treated as CIF, so notional freight and insurance could not be added to assessable value. MRP-based valuation under Section 4A was inapplicable because the goods were imported in liquid bulk form for institutional supply, not in the retail forms covered by the notification or for individual consumer sale, so the additional duty enhancement failed. The demand was also time-barred because the relevant customs documents were already available at clearance and no suppression or wilful misstatement with intent to evade duty was shown.
Issues: (i) Whether the imported goods were sold on CIF basis or FOB basis, and whether notional freight and insurance could be added to the assessable value; (ii) Whether MRP based assessment under Section 4A of the Central Excise Act, 1944 could be applied for computation of additional duty of customs; (iii) Whether the demand was barred by limitation.
Issue (i): Whether the imported goods were sold on CIF basis or FOB basis, and whether notional freight and insurance could be added to the assessable value.
Analysis: The documentary record showed that the marine policy was taken by the overseas supplier, the freight was shown as payable to the overseas party, and the invoice described the goods as meant for supply to the Government of Jharkhand. The materials established that freight and insurance were borne by the foreign supplier and that the shipment was made for delivery at Kolkata on a CIF basis. In that situation, the import value could not be artificially enhanced by adding notional freight and insurance.
Conclusion: The goods were held to have been imported on CIF basis, and addition of freight and insurance to the assessable value was held to be unsustainable, in favour of the assessee.
Issue (ii): Whether MRP based assessment under Section 4A of the Central Excise Act, 1944 could be applied for computation of additional duty of customs.
Analysis: The notification relied upon by the Revenue covered goods of Heading 34.02 only when in the form of bars, cakes, moulding pieces or shapes, whereas the imported goods were in liquid form under CTH 3402 90 99. The goods were also shown to be supplied in bulk to Government hospitals and not meant for retail sale to individual consumers. On that footing, the goods were treated as falling within the institutional supply category, so the statutory conditions for MRP based valuation were not met.
Conclusion: Section 4A based valuation for CVD was held inapplicable, and the Revenue's enhancement on that basis was set aside, in favour of the assessee.
Issue (iii): Whether the demand was barred by limitation.
Analysis: The customs documents were already before the department at the time of clearance, the assessments were final, and no new material was shown to establish suppression or wilful misstatement with intent to evade duty. The later contrary view taken during investigation did not establish grounds for invoking the extended period.
Conclusion: The demand was held to be time-barred, in favour of the assessee.
Final Conclusion: The appeal was allowed on merits as well as on limitation, and the impugned demand and related enhancement did not survive.
Ratio Decidendi: Where the evidence shows that freight and insurance are borne by the overseas supplier, the import price is CIF and not open to artificial loading, and MRP based customs valuation is unavailable unless the imported goods satisfy both the specified notification entry and the statutory requirement of retail price declaration for retail sale rather than institutional supply.