2017 (11) TMI 89 - AT - Central Excise

Valuation of imported goods - old and used machines - enhancement of value - appellant have accepted the enhanced value and has cleared the goods by paying duty on such enhanced value - principles of natural justice - Held that - It is a matter of common experience that the importers, clear the goods, by payment of duty on the enhanced value, inasmuch as the goods imported by them are required and cannot be allowed to be retained by the Customs as the same incurr demurrage and other expenses. It is again a fact of common knowledge that settlement of dispute take years and the imported goods cannot be allowed to be deteriorated in quality till the final out-come of the dispute. Inasmuch as the machines imported by the appellant were required in the assessee s factory, the same were cleared by them on payment of the duty on enhanced value and this fact by itself cannot be adopted as a ground for resolving the disputed issue of valuation. As regards the valuation issue, we note that the same has been enhanced at the time of assessing bills of entries itself on the basis of the opinion of Chartered Engineer. On going through the said opinion, we note that he has not given the value of old and used machine but has only indicated the value of the new machines that too without any basis. Revenue has not adduced any evidence to show flow of any under hand consideration to the supplier of the goods. As per the settled law, the transaction value has to be adopted as correct assessable value for the purposes of payment of duty unless the same is proved to be incorrect, on the basis of positive and tangible evidences. Apart from expressing doubt about the correctness of the transaction value, in the present case, the Revenue, upon whom onus is placed, has not produced any evidence to reflect upon the inaccuracy of the transaction value. In such a scenario, we are of the view that transaction value has to be adopted the correct assessable value. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Valuation of imported old and used machines.
2. Enhancement of assessable value without opportunity to present case.
3. Acceptance of enhanced value and clearance of goods.
4. Applicability of settled law on transaction value.
5. Lack of evidence on underhand consideration to supplier.

Analysis:
1. The case involved the valuation of old and used machines imported with a declared FOB value. The Revenue obtained the opinion of a Chartered Engineer and enhanced the value based on that opinion. The appellant contended that the enhancement was unjust as the transaction value was correct. The Tribunal noted that the value of old machines depends on condition and quality, and the Chartered Engineer's opinion lacked clarity on reconditioning and value. Precedent cases were cited to show that enhancing value based on such certificates was not always justified.

2. The appellant argued that the enhancement of assessable value was a violation of natural justice as they were not given a chance to present their case. The Commissioner (Appeals) rejected the appeal stating that the declared value was lower than the Engineer's suggestion, leading to doubts. However, the Tribunal disagreed, emphasizing that the appellant's acceptance of the enhanced value for clearance did not preclude challenging the valuation. Precedent cases were cited to support the right to appeal despite clearing goods at an enhanced value.

3. The Commissioner (Appeals) upheld the enhanced value, citing the appellant's payment and clearance of goods as acceptance. The Tribunal noted that importers often clear goods urgently to avoid demurrage, and clearing goods at an enhanced value does not waive the right to challenge valuation. Precedent cases were referenced to show that filing an appeal itself constitutes a protest against the assessed value.

4. The Tribunal highlighted the importance of the transaction value unless proven incorrect with tangible evidence. In this case, the Revenue failed to provide evidence to dispute the transaction value, leading to the adoption of the transaction value as the correct assessable value. The impugned orders were set aside, and both appeals were allowed with consequential relief.

5. Additionally, the Tribunal noted the absence of evidence showing any underhand consideration to the supplier of the goods. It reiterated that the transaction value should be accepted unless proven incorrect with concrete evidence. In the absence of evidence challenging the transaction value's accuracy, the Tribunal upheld the transaction value as the correct assessable value.