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Issues: (i) Whether freight and insurance were liable to be added to the declared FOB value for arriving at the assessable value; (ii) whether the demand was barred by limitation and the extended period could be invoked on the basis of suppression or wilful misstatement.
Issue (i): Whether freight and insurance were liable to be added to the declared FOB value for arriving at the assessable value.
Analysis: The dispute turned on valuation under Section 14 of the Customs Act, 1962 and Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The importer claimed that FOB and CIF values were effectively the same for the Bhutan land-border imports and that no transit cost existed between the points of export and import. The Tribunal held that this assertion required documentary substantiation, which was not produced. In the absence of a contractual or record-based demonstration that the transaction was truly on CIF terms or that transportation and insurance were nil and ascertainable, the declared FOB value could not be accepted as the final assessable value. The terms printed on the invoice-cum-challan also indicated buyer's risk and that responsibility ceased when the truck left the factory premises, supporting the Revenue's case that freight and insurance had to be loaded in accordance with the valuation rules.
Conclusion: The addition of freight and insurance to the FOB value was sustained.
Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked on the basis of suppression or wilful misstatement.
Analysis: The show cause notice invoked the extended period under Section 28(4) of the Customs Act, 1962. The Tribunal found that the importer had disclosed the FOB value and, in the sample documents examined, had also indicated nil freight and the insurance element in the self-assessed declaration. On those facts, the Department failed to establish a positive act of suppression or deliberate misstatement. The Tribunal also treated the dispute as one of interpretation and noted that the matter was revenue neutral, since any additional duty paid would have been available as credit. In these circumstances, the strict requirements for invoking the extended period were not satisfied.
Conclusion: The extended period of limitation was not invocable and the demand was time-barred.
Final Conclusion: The appeal succeeded on limitation, the impugned order was set aside, and the demand, interest and penalty did not survive.
Ratio Decidendi: The extended limitation period under customs law cannot be invoked unless the Revenue proves a conscious suppression of material facts or wilful misstatement by positive evidence; a bona fide valuation dispute disclosed in the import documents, especially in a revenue-neutral setting, does not satisfy that standard.
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