2008 (4) TMI 250 - AT - Customs

Enhancement of price of machine imported enhancement, which is done by the lower authorities from US 16,000 to US 60,000 by relying upon the contemporaneous import is misplaced due to the fact that machine, which was imported by the another importer is of 1984 make as it is not in dispute that the machines imported by appellant were manufactured in 1983 and were in use, in view of Circular No. 495/16/93-Cus., value of the machines should be enhanced only upto US 33,000

Summary

Issues:
1. Determination of the correct value of imported machinery.
2. Consideration of contemporaneous import value.
3. Application of Customs Valuation Rules, 1988.
4. Interpretation of law on transaction value and adjustments.
5. Nexus between importer and supplier.
6. Justification for enhancing the declared value.
7. Relevance of year of manufacture in determining value.
8. Consideration of depreciation benefit for old and used machinery.

Analysis:

Issue 1: Determination of the correct value of imported machinery
The case involved an appeal against the Order-in-Appeal that upheld the Order-in-Original enhancing the price of imported machinery declared by the appellant. The expert engineer appraiser observed that the declared value was low, leading to a provisional reassessment and a show cause notice for enhancing the total value to US$ 1,20,000.

Issue 2: Consideration of contemporaneous import value
The appellant contested the reliance on contemporaneous import value, arguing that adjustments for identical goods were not granted. The Commissioner (Appeals) upheld the enhancement based on contemporaneous imports of the same model at a higher price, disregarding the appellant's negotiation claims and citing the need to determine value with reference to contemporaneous imports.

Issue 3: Application of Customs Valuation Rules, 1988
The rejection of transaction value under Section 16 read with Rule 4 was justified by the authorities based on the Customs Valuation Rules, 1988. The Commissioner (Appeals) emphasized the need to load value onto the machinery based on contemporaneous import prices.

Issue 4: Interpretation of law on transaction value and adjustments
The appellant argued that the law required the Department to prove the nexus between importer and supplier, as well as any additional payable amount beyond the invoice value. The failure to address these points rendered the impugned order non-speaking, according to the appellant.

Issue 5: Nexus between importer and supplier
The contention regarding the nexus between importer and supplier, as highlighted in the case law of M/s. Eicher Tractors Ltd., was crucial in determining the correctness of the declared value and the justification for enhancing it.

Issue 6: Justification for enhancing the declared value
The Commissioner (Appeals) relied on the higher price of an identical machine imported by another company to justify the enhancement, despite the appellant's arguments regarding the year of manufacture and technological advancements impacting the value.

Issue 7: Relevance of year of manufacture in determining value
The difference in the year of manufacture between the imported machinery and the contemporaneous imports was debated, with the appellant emphasizing the technological advancements and potential differences in value for old and used machinery.

Issue 8: Consideration of depreciation benefit for old and used machinery
The failure to consider the CBEC Circular regarding depreciation benefits for old and used machinery was noted. Applying the circular, the value of the imported machinery should have been fixed at US$ 33,000 per machine, based on the original value and depreciation calculations.

In conclusion, the Tribunal modified the impugned order, enhancing the declared value to US$ 33,000 per machine instead of the initial US$ 16,000, based on considerations of technological advancements, depreciation benefits, and the relevance of contemporaneous import values.