2006 (11) TMI 384 - AT - Customs

Valuation of the goods - Rejection of transaction value - Confiscation fine and penalty - Second-hand goods - HELD THAT - The adjudicating authority has not accepted the transaction value on account of certain discrepancies between the invoice quantity and the actual quantity verified by the customs. Based on the market value the value has been assessed. Even though the importer produced Chartered Engineer s certificate the same has not been accepted by the adjudicating authority on the ground that the same was based on website for valuation of the goods. He has adopted the valuation by BSI Inspectorate Engineer. He has stated that even though the assesse was allowed to cross-examine the BSI Inspectorate Engineer he has failed to utilize the opportunity. In these circumstances the adjudicating authority has re-determined the assessable value. We are of the view that in order to reject the transaction value the adjudicating authority has to establish one of the circumstances mentioned in Rule 4(2) of the Customs Valuation Rules as held by the Hon ble Apex Court in Eicher case 2000 (11) TMI 139 - SUPREME COURT . To invoke Rule 10(A) the department should have enough grounds. There is no evidence that the appellant had paid extra amount to the foreign supplier through channels other than banking channels. In the absence of evidence we hold that the transaction value has to be accepted. Therefore on the valuation aspect we allow the party s appeal. As regards the licensing aspect we hold that in view of the specific provisions in the import policy the second-hand capital goods require licence. In the absence of licence they are reliable to be confiscated. Hence the confiscation and imposition of fine and penalty are in order. However having regard to the facts and circumstances of the case the redemption fine is limited to 10% of the assessable value and a penalty under 112(a) is limited to 5%. We allow the appeal in the above terms.

Summary

Issues:
1. Import of used goods without specific license.
2. Rejection of declared value and redetermination of value for assessment.
3. Imposition of redemption fine and penalty under Customs Act.

Analysis:

Issue 1: Import of used goods without specific license
The appeal was filed against the Order-in-Original (OIO) passed by the Commissioner of Customs and Central Excise Hyderabad-II Commissionerate regarding the import of used goods without the required specific license. The goods imported, being second-hand, required a specific license as per the Foreign Trade Policy. The adjudicating authority confiscated the goods under Section 111D of the Customs Act for contravening import policy provisions. The appellants contested this decision, arguing that the goods were freely importable as per previous orders by the Commissioner (Appeals). The Tribunal upheld the confiscation of goods due to the absence of the required license for importing second-hand goods.

Issue 2: Rejection of declared value and redetermination of value for assessment
The adjudicating authority rejected the declared value of the imported goods due to discrepancies in quantity and valuation methods. The authority redetermined the value of the goods for the purpose of assessment of Customs duty. The appellants argued that minor discrepancies in quantity and non-production of manufacturer's invoice should not be grounds for rejecting the transaction value. They cited various case laws to support their argument. The Tribunal held that to reject the transaction value, the authority must establish grounds as per Rule 4(2) of the Customs Valuation Rules. As there was no evidence of extra payments made outside banking channels, the transaction value declared by the importer was accepted. The Tribunal allowed the appeal on the valuation aspect, overturning the authority's decision to redetermine the value for assessment.

Issue 3: Imposition of redemption fine and penalty under Customs Act
The adjudicating authority imposed a redemption fine and penalty on the importer under Sections 111D and 112A of the Customs Act, respectively. The appellants contended that the fine and penalty were excessive, citing previous cases where lower rates were applied. The Tribunal considered the circumstances of the case and reduced the redemption fine to 10% of the assessable value and the penalty under Section 112A to 5% of the value of the goods. The appeal was allowed in terms of the reduced fines and penalties, acknowledging the excessive nature of the initial imposition.

In conclusion, the Tribunal upheld the confiscation of goods due to the absence of a specific license for importing second-hand goods, accepted the declared transaction value, and reduced the redemption fine and penalty imposed under the Customs Act based on the circumstances of the case and previous precedents.