ETERNIT EVEREST LTD Vs. COLLECTOR OF CUSTOMS

JUDGEMENT

(1.) THE issue involved in the present appeal is whether service charges paid by Indian purchasers of goods imported by MMTC as Canalising Agent is liable to be included in the assessable value of such goods. Learned Counsel representing the appellant fairly conceded that the issue remains settled in favour of the Revenue by the decision of the Apex Court in the case of Hyderabad Industries Ltd. v. Union of India, 2000 (115) E.L.T. 593 (S.C.). He, however, submitted that the demand is not sustainable as the same is time barred. He stated that the goods in question had been cleared from bond on payment of duty by the appellants during the period 26.05.1988 to 22.06.1990. Service charges at the rate of 3.5% paid to MMTC was not included in the value on which duty was paid. Appellant had, along with Bill of Entry, submitted to the excise authorities relevant invoices which showed that the appellant imported goods paying service charges at the rate of 3.5% over and above the CIF value of the goods. Thus all the relevant particulars were available to the customs authorities when they made the assessment excluding service charges. Therefore, it was not open to the customs authorities to raise demand during the extended period provided under Section 28 of the Customs Act. He also brought to our notice that the original assessments were in conformity with the instructions issued by the Central Board on the subject. Vide its letter F. No. 3/56/63 -Cus. VI, dated 16.09.1964, the Central Board had clarified that service charges cannot be considered to be expenses incurred by the importers in their capacity as Sole Agents or by STC in similar capacity and that such service charges cannot be included under Rule 5(a) of the Valuation Rules. This circular was rescinded vide F. No. 528/207/89 -DUS(TU)(ICD), dated 20.06.1990 of the Ministry of Finance. Learned Counsel submitted that during the relevant period the circular of 1964 was in force and assessments were made in accordance with the understanding of law prevailing in the Govt. of India as well as in the Industry. He therefore submitted that the demand raised is to be quashed. Since the demand is not sustainable, the claim for interest and penalty also must be quashed.

(2.) LEARNED Departmental Representative submitted that in the present case goods had been cleared after they were originally bonded. So, the demand was raised in terms of the bond executed under Section 59 of the Customs Act and not under the provisions relating to short levy contained in Section 28 of the Customs Act.

(3.) WE have perused the records and have considered the submissions made by both sides. Section 28 of the Customs Act which relates to recovery of duties short paid defines the relevant date for the recovery of such amount. In the case of bonded goods 'relevant date' is date of payment of duty. No recovery of duty is permissible without recourse to this relevant date. We therefore hold that the show cause notice issued was clearly beyond the normal period (six months) for recovery of short levy or short payment of duty. In the present case, as the assessments were made in terms of circular of the Government of India and as the appellant had made available all the relevant information, it cannot be held that this is a case which involved suppression of relevant information attracting the provisions regarding extended period. We therefore hold that the demand in the present case was time barred and accordingly it is quashed. Since the demand is time barred, there was no occasion for imposing penalty or claiming interest either. They are also accordingly set aside.