The excise and customs department has moved the Supreme Court against Reliance Industries Ltd (RIL) for alleged customs duty evasion to the tune of Rs 9.64 crore in 2004-05. A bench tagged the petition with another similar one where the revenue department had demanded customs duty of over Rs 11.65 crore from RIL in 2005. The department has challenged the sectoral tribunal Custom Excise & Service Tax Appellate Tribunal’s ruling in favour of RIL in August last year.
The case pertains to duty free import of raw materials such as naphtha and petroleum products by RIL and its subsequent exports at a discounted price. RIL had given substantial discounts ranging from 20-30% to its customers as it saves on customs duty on the import of inputs. The department claims that this was not the right price for assessing excise duty liability. The reason for RIL affording such discounts was because it saved customs duty on the import of inputs.
Since the company didn’t provide details for calculation of such benefits, the department equated the discount amount for supply to deemed exporter of customs duty saved on import by the assessee. The revenue department further contended that such surrendering of advance licence by the customer to the assessee was in the nature of the additional consideration, which would form part of the price of the final products for the purposes of excise duty. It said that RIL had cleared the goods without determining the correct assessable value which was in violation of the Central Excise Act.