2008 (9) TMI 233 - AT - Customs

Import of second-hand machine for research purposes free of charge - appellant declared the value on basis of Chartered Engineers Certificate W.E.F. 1-4-1999, these machines could be imported only under specific licence since licensing requirement were imposed after impugned import, there was no mala fide and hence fine in lieu of confiscation is not imposable hold that the value declared by the supplier and certificate being reasonable has to be accepted in the absence of any evidence to show that there was mala fide or fraud in obtaining such a certificate held that foreign Chartered Engineer s certificate should be accepted or rejected in toto and there cannot be a partial acceptance or rejection

Summary

Issues Involved:
1. Imposition/Enhancement of Redemption Fine
2. Valuation of Imported Goods

Issue-wise Detailed Analysis:

1. Imposition/Enhancement of Redemption Fine:
- The appellants imported 21 second-hand automotive equipment from Robert Bosch, Germany, for research purposes. Out of these, two machines were not covered by the EPCG license, requiring a specific license effective from 1-4-1999.
- The Adjudicating Authority imposed a redemption fine of Rs. 2,00,000/- due to the lack of a specific license, which was reduced to Rs. 1,00,000/- by the Commissioner (A). The CEGAT remanded the matter to reconsider the waiver of redemption fine under Para 1.5 of the EXIM Policy and the valuation of the machinery.
- Upon remand, the Commissioner (A) confirmed the valuation and re-determined the redemption fine to Rs. 1,50,000/-.
- The appellants argued that the purchase order and dispatch instructions were given before the amendment requiring a license, thus qualifying for the benefit of Para 1.5 of the EXIM Policy. They contended that the machinery was supplied free of cost under a contract for research and development services, and they had taken steps to obtain a license from DGFT.
- The Tribunal found that the agreement between the appellant and their foreign principal was made when no license was required, and dispatch instructions were given before the policy amendment. The appellants later applied for and obtained the necessary license. Therefore, the imposition of redemption fine was deemed unwarranted, and the fine imposed by the Commissioner (A) was set aside.

2. Valuation of Imported Goods:
- The appellants declared the value based on the foreign supplier's invoice, which was not accepted by customs due to the relationship between the appellant and the supplier. The department insisted on valuation by M/s. SGS, which cost the appellants Rs. 50,673/-.
- The Adjudicating Authority adopted the depreciated value from the Chartered Engineer's certificate instead of the SGS valuation. The appellants argued that the declared value certified by the Chartered Engineer should be accepted in toto, and the depreciation method should not be used merely because the goods were supplied free of cost.
- The Tribunal noted that the department did not utilize the SGS valuation and instead used the Chartered Engineer's certificate to determine the value by depreciation for 7 years, despite the machinery's age ranging from 11-31 years.
- The appellants cited several case laws to support their argument that the foreign Chartered Engineer's certificate should be accepted or rejected in totality. The Tribunal found no evidence of fraud or mala fide in obtaining the certificate and held that the value declared by the supplier, certified as reasonable by the foreign Chartered Engineer, should be accepted.
- Consequently, the Tribunal allowed the appeal with consequential relief, accepting the transaction value certified by the foreign Chartered Engineer and setting aside the redemption fine.

Conclusion:
The Tribunal set aside the redemption fine imposed by the Commissioner (A) and accepted the transaction value certified by the foreign Chartered Engineer, allowing the appeal with consequential relief. The Tribunal emphasized the importance of accepting or rejecting the Chartered Engineer's certificate in totality and found no evidence of fraud or mala fide in the declared value.