2004 (10) TMI 441 - AT - Customs

Issues Involved:
1. Rejection of declared value and re-fixation of assessable value.
2. Demand of differential duty.
3. Confiscation of goods and imposition of fine and penalty.
4. Inclusion of freight charges in assessable value.
5. Validity of Chartered Engineer's certificate.
6. Alleged misdeclaration by the importer.

Issue-wise Detailed Analysis:

1. Rejection of Declared Value and Re-fixation of Assessable Value:
The Commissioner rejected the declared value of Rs. 11,12,400/- (FOB) and assessable value of Rs. 13,60,868/- for the imported windmill blades, re-fixing them at Rs. 90,00,011/- (FOB) and Rs. 1,02,10,924/- respectively under Rule 8 of the CVR. The appellants argued that the blades were manufactured in 1995-96 and sold at a negotiated price due to lack of buyers. The Department enhanced the value based on the Chartered Engineer's certificate, which the appellants contested, stating that the goods were new and not second-hand, thus not requiring appraisal by a Chartered Engineer. The Tribunal noted that the Department failed to disprove the declared value and did not provide evidence that the transaction value was influenced by non-commercial considerations.

2. Demand of Differential Duty:
The Commissioner demanded a differential duty of Rs. 26,55,017/- under Section 28(1) of the Customs Act, 1962, and adjusted Rs. 3,02,496/- paid by the importer. The appellants had initially paid duty on merit at 25% BCD and 4% SAD. The Tribunal observed that the appellants paid the differential duty arising from the non-inclusion of freight charges during the investigation and before the issuance of the show cause notice, indicating no mala fide intent.

3. Confiscation of Goods and Imposition of Fine and Penalty:
The Commissioner confiscated the goods under Section 111(m) of the Customs Act, with an option to redeem them on payment of a fine of Rs. 10,22,000/- under Section 125, and imposed a penalty of Rs. 5,11,000/- under Section 112(a). The Tribunal found no misdeclaration regarding the nature of goods, country of origin, or supplier, and ruled that the charge of misdeclaration could not be sustained.

4. Inclusion of Freight Charges in Assessable Value:
The appellants did not initially include freight charges of Rs. 10,08,565/- in the assessable value due to ignorance. The Tribunal noted that the appraising officer should have inquired about freight and insurance charges. The appellants paid the differential duty once the omission was pointed out, and no insurance was paid for the goods. The Tribunal concluded that no mala fide could be attributed to the appellants for this omission.

5. Validity of Chartered Engineer's Certificate:
The appellants contested the reliance on the Chartered Engineer's certificate, arguing that it was not mandated for new goods and had contradictions. The Tribunal observed that the Department did not attempt to obtain the manufacturer's price through diplomatic channels and relied solely on the Chartered Engineer's certificate, which lacked detailed enquiry. The Tribunal ruled that the certificate could not form the basis for enhancing the value.

6. Alleged Misdeclaration by the Importer:
The Department alleged misdeclaration due to non-disclosure of freight charges. The Tribunal found that the appellants were first-time importers and unaware of the requirement to include freight charges. The Tribunal ruled that there was no misdeclaration as the appellants had declared the nature of goods, country of origin, and supplier correctly.

Conclusion:
The Tribunal set aside the impugned order, holding that the declared transaction value should be accepted as the correct value. The Tribunal allowed the appeal with consequential relief to the appellants, emphasizing that the Department failed to discharge its burden of disproving the declared value and that no mala fide intent was established.

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