2017 (4) TMI 262 - AT - Customs

Valuation - import of second hand machinery - assessment has been done after granting depreciation of 70% - no reason has been given to discard the declared invoice value in terms of Rule 4 of the Customs Valuation Rule - Held that - None of the authorities advert to this Rule or say for what reasons as provided under Rule 4(2) the transaction value will have to be rejected - It is clear that in the absence of any ground for rejecting the invoice value it is not open to the Revenue to adopt any other value under any Rule subsequent to Rule 4 of the Customs Valuation Rules - appeal allowed - decided in favor of appellant.

Summary

Issues:
Valuation of imported second-hand machinery; rejection of declared invoice value; applicability of Customs Valuation Rules, 1988; influence of relationship between importer and supplier on declared prices; reliance on Circular No.493/124/86-Cus VI; interpretation of Rule 4 of Customs Valuation Rules.

Analysis:
The case involved the importation of second-hand machinery by the appellant, Z.F. Steering Gear (I) Ltd., and the subsequent valuation for customs duty assessment. The appellant sought assessment based on the declared invoice value, but the Commissioner (Appeals) rejected this and relied on Circular No.493/124/86-Cus VI issued by the Dept. of Revenue, Ministry of Finance. The appellant argued that the Circular was issued before the introduction of Customs Valuation Rules, 1988, and therefore lost significance. The appellant also highlighted a previous order by the Dy. Commissioner of Customs, GATT Valuation Cell, Mumbai, which emphasized that the relationship between the importer and supplier did not influence the declared prices. Additionally, the appellant cited a decision of the Hon’ble Supreme Court in a similar case for support.

The Tribunal noted that the valuation had been done after granting a 70% depreciation but found that no reason had been provided to discard the declared invoice value as required by Rule 4 of the Customs Valuation Rules. Citing a previous decision of the Hon’ble Supreme Court, the Tribunal emphasized that in the absence of any grounds for rejecting the invoice value, the Revenue could not adopt any other value under subsequent rules. The Tribunal allowed the appeal, set aside the previous order, and directed that the Bill of Entry as submitted by the appellant be accepted, with any overpayment to be refunded.

In conclusion, the Tribunal's decision was based on the interpretation of Rule 4 of the Customs Valuation Rules, emphasizing the importance of following the prescribed procedures and providing valid reasons for rejecting declared values. The judgment highlighted the need for transparency and adherence to established rules in customs valuation assessments, ultimately ruling in favor of the appellant due to the lack of justification for deviating from the declared invoice value.