2016 (12) TMI 1505 - AT - Customs

Valuation - Wartsila Reconditioned 18V32LN engine no. 21888 with Napier Trubocharger Reconditioned ABB alternator rated at 7600 KVA with AVR - rejection of declared value - rejection on the ground that the Chartered Engineer s certificate issued in the country of export was not acceptable owing to discrepancy with the year of manufacture on the plate affixed to the engine - Held that - the pre-shipment inspection report issued by Bureau Veritas was examined, and it clearly states that the original manufacturing date of the engine is 10th October 1994 and that of the alternator is 17th October 1995 with the common base plate having been manufactured on the 2nd of April 1996. While Revenue has no issue in accepting the original manufacturing date of the alternator, they do not accord the same credibility to the manufacturing date of the engine as certified in the certificate. Undoubtedly, both the lower authorities are of the view that the certificate does not reflect the date on the plates affixed to the engine. Even if that were an acceptable proposition, the enhancement of value should have been in accordance with the provisions in the Customs Valuation Rules and not by placing reliance on an expert appraiser as has been done by the original authority. Reliance was placed in the decision of the case of Essar Graphics (P) Ltd. v. Commissioner of Customs, Chennai 1998 (8) TMI 250 - CEGAT, MADRAS , where it was held that rejection of value cannot be done merely relying on foreign Chartered Engineer s certificate Declared value to be accepted - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Dispute in valuation of imported machinery.
2. Rejection of declared value based on discrepancy in the year of manufacture.
3. Enhancement of value by the original authority.
4. Rejection of refund claim by the proper officer.

Issue-wise Detailed Analysis:

1. Dispute in Valuation of Imported Machinery:
M/S Modipon Fibres Co. sought the quashing of an order related to the valuation of a 'Wartsila Reconditioned 18V32LN engine' imported in November 2002. The declared value of €400,000 was rejected by the original authority due to a discrepancy in the year of manufacture on the engine's plate. The Tribunal noted that the declared value was enhanced to €483,086 on the bill of entry, which the first appellate authority remanded back for a speaking order. The Tribunal emphasized that valuation should adhere to the Customs Valuation Rules rather than relying solely on an expert appraiser’s opinion.

2. Rejection of Declared Value Based on Discrepancy in the Year of Manufacture:
The original authority rejected the declared value based on a discrepancy in the year of manufacture as indicated on the engine's plate. The Tribunal highlighted that both lower authorities did not accept the manufacturing date certified by Bureau Veritas. The Tribunal referred to the decision in Essar Graphics (P) Ltd., stating that a transaction value cannot be discarded without pointing out circumstances set in Rule 4(2) or 4(3) of the Customs Valuation Rules.

3. Enhancement of Value by the Original Authority:
The original authority enhanced the value based on an expert appraiser's opinion, which assessed the CIF value to be ?2,91,53,608/-. The Tribunal found this method unreasonable and emphasized that any enhancement should comply with the Customs Valuation Rules. The Tribunal reiterated that the enhancement of value should not be based on subjective assessments but should follow the legal framework provided by the rules.

4. Rejection of Refund Claim by the Proper Officer:
The appellant's refund claim for the excess amount charged was rejected by the proper officer on the grounds that the pre-condition of challenging the assessment had not been complied with. The Tribunal noted that the rejection of the refund claim was tied to the rejection of the appeal against the order of assessment. Since the appeal against the order of assessment was being rejected, the Tribunal also rejected the appeal against the refund claim.

Conclusion:
The Tribunal allowed the appeal, emphasizing the need for adherence to the Customs Valuation Rules and the importance of transaction value as per Section 14 of the Customs Act. The Tribunal concluded that the declared transaction value should be accepted in law, following the principles established in previous cases like Essar Graphics (P) Ltd. and Coats Viyella India Ltd. The Tribunal allowed the appeal with consequential relief, ensuring that the valuation process aligns with the legal provisions and established jurisprudence.