Customs duty date and valuation rules: entry inwards governs duty, and income-tax depreciation cannot drive assessable value.

For imported goods, the customs duty rate is determined under Section 15 of the Customs Act by reference to the date of entry inwards where the bill of entry was filed earlier; presentation before entry inwards is treated as occurring on the date entry inwards is granted. In valuation of second-hand machinery, Section 14 of the Customs Act and the Customs Valuation Rules govern the assessable value, and depreciation principles under the Income-tax Act cannot be imported into customs valuation. Depreciation at 15% per annum was accepted under the customs method, but enhancement merely on account of rupee depreciation and alleged price rise was not justified on the facts.

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Issues: (i) Whether the rate of customs duty on the imported goods was to be determined with reference to the date of presentation of the bill of entry or the date of entry inwards and arrival of the goods. (ii) Whether the assessable value of the second-hand machinery could be determined by applying depreciation under the Income-tax Act and whether further enhancement on account of price rise was justified.

Issue (i): Whether the rate of customs duty on the imported goods was to be determined with reference to the date of presentation of the bill of entry or the date of entry inwards and arrival of the goods.

Analysis: Under Section 15 of the Customs Act, 1962, the applicable rate of duty is the rate in force on the date on which the bill of entry is presented, but where the bill is presented before entry inwards, it is deemed to have been presented on the date of such entry inwards. The absence of an entry inwards number on the bill of entry indicated that presentation preceded entry inwards. The import was therefore not complete until entry inwards was granted.

Conclusion: The relevant rate of duty was the rate in force on the date of arrival of the goods and granting of entry inwards, not the date of filing the bill of entry.

Issue (ii): Whether the assessable value of the second-hand machinery could be determined by applying depreciation under the Income-tax Act and whether further enhancement on account of price rise was justified.

Analysis: Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 1963 governs valuation of imported goods. Depreciation for Income-tax purposes cannot be imported into customs valuation. Depreciation at 15% per annum allowed under the customs valuation process was accepted, but enhancement merely because of rupee depreciation vis-a -vis the U.S. dollar and alleged price rise was not justified on the facts.

Conclusion: Income-tax depreciation could not be applied for customs valuation, but the proposed enhancement of value on account of price rise was not sustainable.

Final Conclusion: The appeal succeeded on the issue of the relevant date for duty but failed on the attempted escalation of value beyond the permissible customs valuation method, resulting in partial relief to Revenue only.

Ratio Decidendi: For imported goods, the duty rate is fixed by Section 15 of the Customs Act, 1962 with reference to entry inwards where the bill of entry was filed earlier, and valuation must be made only under Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 1963 without borrowing depreciation principles from the Income-tax Act.

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