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2013 (3) TMI 597 - AT - CustomsConfiscation of goods - import of three old and used machines - violation of the provisions of Exim Policy 2002 - 2007 - Enhancement in value of machinery - Difference of opinion - Majority order - Held that - Since the certificate produced by the importers was not reliable because of the aforesaid reasons the Department was within its right to appoint another panel of experts. The importers never challenged the composition/qualification of the Expert Committee nor did they ever challenge the findings given by the said Committee till the stage of adjudication. In fact they requested the adjudicating authority not to issue any written show cause notice also. At this late stage the appellants cannot be allowed to raise the ground of lack of qualification of the Expert Committee which will render the Revenue remediless. - As regards the certificate submitted by the importer the same can be ignored as the same was not based on true state of the machineries or the documents. Since the Expert Committee nominated by the Department has given their opinion after minutely verifying the state and the year of make of the machineries. It is also not the claim of the appellants that the said examination by the Expert Committee was done in their presence. In view of all above factors the report given by the Expert Committee appointed by the Revenue is more reliable. Once the transaction price was not reliable as the true assessable value the only reasonable method was to determine the value on the basis of market enquiry as it would be next to impossible to find out a contemporaneous import of a similar machinery of similar vintage - Hence the enhancement of value of the three machines to Rs. 16 lakhs should be upheld. EURO was introduced as an accounting currency only on 1-1-1999 and EURO notes entered circulation only on 1-1-2002. In this regard a small write-up as downloaded from Wikipedia is enclosed. Hence the prices of machineries manufactured around 1994 could never have been mentioned in EURO. This coupled with the fact of mis- declaration of age of the machineries necessitates the discard of certificate produced by the importer as a whole. Mentioning of price in EURO when EURO was not even conceived makes it clear that the certificate was a sham. The value certified vide this certificate can also not be taken to be true on account of mis-declaration. There was a deliberate misdeclaration of description and value and a restricted commodity was sought to be illicitly imported without processing a valid licence to import the same. Hence the confiscation of machines is liable to be upheld. Chartered Engineer s certificate which accompanied the imported consignment was rejected by the lower authorities due to the discrepancies noticed as regards factual findings of the motor and coolant pump having manufacturing year mentioned as 1979 and 1981 marked on them. After the said rejection of the Chartered Engineer s certificate the Customs authorities appointed a Committee of Experts to consider the age of the machinery - there is no serious challenge in determining the age of the machinery on the basis of experts appointed by the Customs authorities. I find that the contest of the appellant herein is that the age of the machinery cannot be determined on the year marked on the electrical part for which reliance was placed on the judgment of the Tribunal in the case of Vardhman Spinning & General Mills v. CC (2004 (6) TMI 76 - CESTAT NEW DELHI). I find that when machines were inspected and the consignments were opened it was in the presence of the assessee or their representative. This point is not disputed by the appellants anywhere in the grounds of appeal. If there is no dispute as to the inspection done by the experts as regards the age of the machines only challenging the qualification of the said Engineer may not carry the case of the appellant any further. Confiscation of the machineries with option to the appellant to redeem the same on payment of redemption fine adjusted by the lower authorities is upheld. Similarly penalty imposed upon the appellant is also upheld. However the enhancement of assessable value by the lower authorities is set aside - Decided partly in favour of assesse.
Issues Involved:
1. Validity of the expert committee's opinion on the age of the imported machines. 2. Legitimacy of the enhancement of the value of the imported machines. 3. Rejection of the Chartered Engineer's opinion submitted by the importer. 4. Validity of the original value of the machines indicated in EURO. 5. Justification for the confiscation of the machines. 6. Imposition of penalty on the importer. Issue-wise Detailed Analysis: 1. Validity of the Expert Committee's Opinion on the Age of the Imported Machines: The dispute centered on the import of three old and used machines, which the Revenue claimed were more than 15 to 20 years old, thus violating the Exim Policy 2002-2007 as they required a license for import. The customs authorities, upon physical examination, found discrepancies in the machines' age, such as old motors dated 1979 and 1981. The local Chief Engineer's report supported these findings. The Joint Commissioner upheld the confiscation based on these examinations. The Commissioner (Appeals) also relied on the expert committee's report and rejected the foreign supplier's Chief Engineer's certificate. The Tribunal found that the import documents were not convincingly rebutted by the Revenue, and thus, there was no contravention of the Exim policy justifying confiscation and penalty. 2. Legitimacy of the Enhancement of the Value of the Imported Machines: The appellant declared a CIF value of Rs. 10,68,780/-, which the authorities rejected, directing payment of duty on an enhanced value. However, the Joint Commissioner did not specify the enhanced value in the order. The Commissioner (Appeals) did not provide evidence to show that the invoice value was incorrect. The Tribunal noted that the Assistant Commissioner did not quantify the enhanced value and found no reason for payment of duty on an unspecified enhanced value. The valuation aspect was not adequately discussed, and the Tribunal upheld the payment of duty on the invoice price. 3. Rejection of the Chartered Engineer's Opinion Submitted by the Importer: The Commissioner (Appeals) rejected the Chief Engineer's certificate from the foreign supplier, citing lack of technical literature, supporting documents, and the certificate being from an engineer in England for machines exported from Germany. The Tribunal agreed that the reasons for rejecting the foreign certificate were equally applicable to the local expert's report, which was based on visual examination without technical literature or market survey. Thus, the Tribunal found the foreign certificate more credible. 4. Validity of the Original Value of the Machines Indicated in EURO: The Chartered Engineer's certificate indicated the original price of the machines in EURO, which the Commissioner (Appeals) found suspicious as EURO was introduced later. The Tribunal noted that the certificate was issued in 2004 when EURO was in existence and found no reason to doubt the certificate based on the currency used. 5. Justification for the Confiscation of the Machines: The Joint Commissioner ordered the confiscation of the machines under Section 111(d), (f), and (m) of the Customs Act, 1962, with an option to redeem them upon payment of a fine and duty on the enhanced value. The Tribunal found that the import documents were not convincingly rebutted by the Revenue and that there was no contravention of the Exim policy justifying confiscation. The Tribunal set aside the confiscation order. 6. Imposition of Penalty on the Importer: A penalty of Rs. 1,50,000/- was imposed on the importer under Section 112 of the Customs Act, 1962. The Tribunal, finding no contravention of the Exim policy and no adequate evidence for undervaluation, set aside the penalty imposed on the importer. Separate Judgments: The case saw differing opinions among the members of the Tribunal. The Member (Judicial) found no justification for confiscation and penalty, while the Member (Technical) upheld the expert committee's findings and the penalty. The third member, Member (Judicial), agreed with the Member (Judicial) on the valuation issue but sided with the Member (Technical) on other points, leading to a majority order. The final order upheld the confiscation and penalty but set aside the enhancement of the assessable value.
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