2002 (6) TMI 312 - AT - Customs

Summary

Issues Involved:
1. Determination of the transaction value of imported second-hand machinery.
2. Validity of rejecting the declared transaction value.
3. Compliance with Customs Valuation Rules for assessing the value.
4. Adherence to principles of natural justice.

Issue-wise Detailed Analysis:

1. Determination of the Transaction Value of Imported Second-Hand Machinery:
The appellants imported second-hand Schlafhorst autoconers under an EPCG Licence. The declared CIF value was US $ 28,750 per machine. The department assessed the value based on a manufacturer's letter, determining the value at Rs. 20,90,880 and Rs. 20,66,130 per machine for different consignments. The appellants argued that the transaction value declared was fair and correct, supported by a Chartered Engineer's certificate.

2. Validity of Rejecting the Declared Transaction Value:
The appellants contended that there was no evidence to suggest the declared transaction value was incorrect. They cited the Supreme Court judgment in Eicher Tractors Ltd. v. CC, Mumbai, which established that the transaction value should be the price actually paid or payable. The department's reliance on a manufacturer's letter, without providing it to the appellants, was challenged as a violation of natural justice.

3. Compliance with Customs Valuation Rules for Assessing the Value:
The adjudicating authority did not specify under which Rule of the Customs Valuation Rules (CVR), 1988, the value was assessed. The original authority appeared to have rejected the transaction value under Rule 4 and applied Rule 8 without considering Rules 5, 6, and 7. The Tribunal noted that the transaction value should be determined sequentially through Rules 5 to 8 if Rule 4 is not applicable. The department failed to provide reasons for bypassing these intermediary rules, which was necessary under the CVR.

4. Adherence to Principles of Natural Justice:
The appellants argued that the department did not provide them with the SIB Circular and the manufacturer's letter used to assess the value, which was against the principles of natural justice. The Tribunal found merit in this argument, emphasizing that the appellants should have been given an opportunity to rebut the evidence used against them.

Conclusion:
The Tribunal set aside the impugned orders and remanded the case to the original authority. The original authority was directed to reassess the value in accordance with the law, providing the appellants with the SIB Circular and its enclosures, and allowing them an effective opportunity to present their case. The Tribunal emphasized the need for a speaking order, detailing the reasons for rejecting the transaction value and the sequential application of the CVR.