Retail sale price valuation cannot apply to imported goods for captive use; reassessment without statutory basis fails.

Imported batteries intended for further processing and captive use in the importer's own factory could not be subjected to additional customs duty on a retail sale price basis under section 3(2) of the Customs Tariff Act read with section 4A of the Central Excise Act merely because the packages bore retail markings. The valuation scheme was applied by distinguishing goods cleared for retail sale from goods imported for self-use or subsequent processing. Customs also lacked a proper basis to revise the declared value through reassessment under section 28 of the Customs Act in the absence of an enabling machinery provision. The demand, confiscation, and penalties were therefore set aside.

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Issues: Whether imported batteries intended for further processing in the importer's own factory could be assessed to additional duty of customs on a retail sale price basis under section 3(2) of the Customs Tariff Act, 1975 read with section 4A of the Central Excise Act, 1944, and whether the customs authorities could revisit the declared value through reassessment under section 28 of the Customs Act, 1962.

Analysis: The imported goods were treated by the adjudicating authority as goods required to bear retail sale price markings and were therefore subjected to valuation under the proviso to section 3(2) of the Customs Tariff Act, 1975. The decision turned on whether that retail sale price mechanism could be applied where the importer asserted that the goods were not meant for retail sale but for further processing and captive use before any downstream sale. The regulatory scheme of legal metrology and the valuation provisions for additional duty of customs were examined together, with emphasis on the distinction between goods cleared for retail channels and goods imported for self-use or subsequent processing. The conclusion also depended on whether customs had any legal basis to alter the declared valuation at import in the absence of a specific machinery provision enabling such revision.

Conclusion: Imported goods meant for further processing by the importer could not be forced into retail sale price based assessment merely because they bore package markings, and the reassessment made under section 28 of the Customs Act, 1962 was not sustainable. The demand, confiscation, and penalties were therefore set aside in favour of the assessee.

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