Officials have alleged that the prices on the LME were much higher for the metals than what were claimed by the importers. They claim that the importers were undervaluing zinc and copper to save on customs duty.
Many importers have approached courts, challenging the orders enhancing import duties.
According to importers, metal prices fluctuate a lot. For customs duty, the price at the time of placing the order must be considered, and not the prevailing price at the time when the tax is levied, they said.
They also claim that the tax department had only challenged valuations when the price of zinc or copper was recorded higher at the London Metal Exchange and not the other way around.
Several importers have challenged the reassessment orders in the Madras High Court.
“As per valuation rules, customs duty is payable on the transaction value, that is the price paid by the importer when the transactions are with unrelated parties. Any deviation from the transaction value, to enhance the value, must happen only by following the process of law prescribed under the rules,” said Abhishek A Rastogi, partner at Khaitan & Co, who is representing many Indian importers.