Customs valuation and extended limitation: freight and insurance loading may stand, but suppression must be proved for extended time limit.

Freight and insurance may be added to declared FOB value where the importer cannot produce cogent material showing that transportation and insurance costs were nil or that FOB and CIF values were identical; on the facts, the invoice terms and lack of proof supported loading of assessable value. By contrast, the extended limitation period cannot be invoked without proof of conscious suppression or wilful misstatement, and a valuation dispute with full disclosure and revenue-neutral consequences does not by itself satisfy that threshold. The material thus illustrates the distinction between valuation adjustment on merits and the stricter requirement for invoking extended limitation under customs law.

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Issues: (i) Whether freight and insurance were liable to be added to the declared FOB value under Rule 10(2) of the Customs Valuation Rules, 2007. (ii) Whether the notice invoking the extended period was sustainable on the grounds of suppression and wilful misstatement.

Issue (i): Whether freight and insurance were liable to be added to the declared FOB value under Rule 10(2) of the Customs Valuation Rules, 2007.

Analysis: Section 14(1) of the Customs Act, 1962 fixes valuation on the transaction value, and Rule 10(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 permits loading where transportation cost is not ascertainable, with freight and insurance additions being attracted on the facts. The declared FOB basis was not supported by cogent documentary material showing that FOB and CIF were identical or that transportation and insurance were nil. The invoice terms indicated ex-works responsibility and risk with the buyer, supporting the departmental case for loading the assessable value.

Conclusion: The addition of freight and insurance was upheld against the appellant.

Issue (ii): Whether the notice invoking the extended period was sustainable on the grounds of suppression and wilful misstatement.

Analysis: The appellant had disclosed the FOB value and nil freight in the bill of entry documentation, and the Revenue did not establish a conscious withholding of material facts or deliberate misstatement. The dispute was treated as one of valuation interpretation, and the availability of credit rendered the matter revenue neutral. In such circumstances, the ingredients required to invoke the extended period under Section 28(4) of the Customs Act, 1962 were not satisfied.

Conclusion: The invocation of the extended period was held unsustainable in favour of the appellant.

Final Conclusion: The appeal succeeded because the demand could not be sustained through the extended limitation route, and the impugned order was set aside.

Ratio Decidendi: The extended period of limitation under customs law cannot be invoked unless the Revenue proves a conscious suppression of material facts or wilful misstatement; a valuation dispute supported by disclosure and revenue-neutral consequences does not by itself establish such suppression.

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