Customs valuation and extended limitation: no wilful suppression found, so penalties and extended demand failed.

The valuation method for ex-works imports treated as FOB value was upheld as legally correct for inclusion of air freight in assessable value, but the extended limitation under section 28(4) of the Customs Act was not available because wilful suppression or misstatement was not proved. The importer's failure to declare local transport cost up to the port of export was treated as an oversight, and the record did not show any intent to evade duty. As the ingredients for extended limitation were absent, the consequential penalties under sections 114A and 114AA were also not sustainable.

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Issues: (i) Whether the extended period of limitation under section 28(4) of the Customs Act, 1962 was invocable and consequential penalties under sections 114A and 114AA of the Customs Act, 1962 were sustainable.

Analysis: The dispute centred on the declaration of ex-works imports as FOB value and the consequent computation of air freight for inclusion in assessable value. The Tribunal held that the valuation method adopted by the department was legally correct, but the material question was whether the importer's declaration amounted to wilful suppression or misstatement so as to attract the extended period. It found that the importer had not declared the local transport cost up to the port of export and that officers also failed to correct the assessment during the period when self-assessment was not operating. On the record, there was no material showing an intention to evade duty. The omission was treated as an oversight rather than deliberate suppression, and therefore the ingredients required for extended limitation and the associated penalties were not established.

Conclusion: The extended period under section 28(4) was not invocable and the penalties under sections 114A and 114AA were not sustainable.

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