2006 (8) TMI 345 - AT - Customs

Summary

Issues Involved:
1. Examination and valuation of imported printing machinery.
2. Alleged misdeclaration and undervaluation of goods.
3. Confiscation and penalties under Sections 111(d) and 111(m) of the Customs Act, 1962.
4. Applicability of EXIM Policy 2002-2007 on second-hand capital goods.

Detailed Analysis:

1. Examination and Valuation of Imported Printing Machinery:
A Bill of Entry No. 560 dated 4-3-04 was filed for clearing a printing machine manufactured in 1995 with a declared CIF value of Rs. 19.96 lakhs. Upon examination on 17-3-04, discrepancies were noted in the machine's specifications, including the absence of the year of manufacture and serial number, and the presence of freshly pasted steel plates with the "Royal Zenith" brand. The Department alleged that these particulars were freshly engraved and not original, leading to doubts about the machine's declared identity and value.

2. Alleged Misdeclaration and Undervaluation of Goods:
The Department argued that the declared value of Rs. 19.96 lakhs was highly undervalued based on various factors, including the machine's weight and comparisons with similar machines quoted on the Internet. The importer failed to provide the original manufacturer's invoice or other supporting documents to substantiate the declared value. Consequently, the Department determined the value under Rule 8 of the Customs Valuation Rules, 1988, arriving at a value of Rs. 39,60,000/- based on the National Import Data Base and market investigations.

3. Confiscation and Penalties under Sections 111(d) and 111(m) of the Customs Act, 1962:
The Commissioner of Customs, Nagpur, enhanced the assessable value to Rs. 42,10,000/- and ordered the confiscation of the goods under Sections 111(d) and 111(m) of the Customs Act, 1962. An option was given to the importer to redeem the goods on payment of a redemption fine of Rs. 20 lakhs, and a penalty of Rs. 5 lakhs was imposed under Section 112(a) of the Customs Act, 1962. The importer appealed against this order, leading to the Hon'ble CESTAT setting aside the initial order and directing a fresh decision.

4. Applicability of EXIM Policy 2002-2007 on Second-Hand Capital Goods:
The Department argued that the import of second-hand printing machines was restricted under para 2.17 of the EXIM Policy 2002-2007, as these machines were not listed as permissible capital goods in para 2.32. The importer contested this, arguing that the order was not speaking and that the Commissioner should have followed the Export Promotion Council's opinion. However, the adjudicator upheld the confiscation, noting that the printing machines were not listed as capital goods under para 2.17 of the Policy.

Conclusion:
The adjudicator found the Chartered Engineer's Certificate unreliable and upheld the Department's valuation under Rule 8, rejecting the transaction value. The liability to confiscation under Section 111(d) was upheld due to the import of restricted second-hand capital goods. The quantum of fine was reduced to Rs. 10 lakhs, and the penalty under Section 112 was reduced to Rs. 1 lakh. The appeal was partially allowed in these terms.