2019 (6) TMI 171 - HC - Customs

Re-examination and verification of machine by another approved Chartered Engineer - valuation of importation of second hand machinery - HELD THAT - In the present case, the admitted position is that the Department has itself appointed a Chartered Engineer who has given a report to the effect that the machine imported by the Petitioner is a used/repaired one. Clearly, this is not in consonance with para 11 of circular dated 15th October, 2015 issued by the Central Board of Excise and Customs which permits the importer to select any Chartered Engineer empanelled by the Customs House for such inspection and report. The Petitioner will appear before Dy. Commissioner Customs, Group-5, New Customs House on 3rd June, 2019 at 11 am - The Petitioner will furnish to the said officer the name of the Chartered Engineer selected by the Petitioner from the panel prepared by the Customs House - The report of the Chartered Engineer after inspection of the machine in question will be made available both to the Department as well as to the Petitioner not later than 10th June, 2019. Petition disposed off.

Summary

Issues:
Importation of used machinery under EPCG license, appointment of Chartered Engineer, valuation of second-hand machinery, show cause notice challenge.

Importation of used machinery under EPCG license:
The petitioner imported a "Stent Crimping Machine" from the USA under the EPCG license for manufacturing drug eluting stent with its parts and accessories. The Customs Department appointed a Chartered Engineer who reported that the machine was used, old, and refurbished. The petitioner sought re-examination by another approved Chartered Engineer as per the circular issued by the Central Board of Excise and Customs.

Appointment of Chartered Engineer:
The circular dated 15th October, 2015, specified the procedure for valuation of imported second-hand machinery. It stated that no importer should be required to have an inspection or appraisal report from a particular Chartered Engineer. The importer was free to select any Chartered Engineer empaneled by the Customs House for the respective class of goods. In this case, the Department's appointment of a Chartered Engineer conflicted with the circular's provision, allowing the importer to choose an engineer from the Customs House's panel.

Valuation of second-hand machinery:
The Chartered Engineer appointed by the Customs Department reported that the imported machine was used/repaired, contrary to the circular's provision. The court directed the petitioner to appear before the Deputy Commissioner Customs and select a Chartered Engineer from the panel prepared by the Customs House for inspection. The engineer's report was to be submitted to both the Department and the petitioner for consideration before deciding on the release of the machine.

Challenge to show cause notice:
While the first writ petition sought re-examination of the machine, a show cause notice was issued during its pendency, which was challenged in the second writ petition. The court directed that the proceedings in the show cause notice would proceed in accordance with the law, separate from the directions given regarding the inspection and valuation of the imported machinery.

Conclusion:
The court issued directions for re-inspection of the machine by a Chartered Engineer selected by the petitioner from the Customs House's panel. The decision on releasing the machine was to be based on the new report, with the show cause notice proceedings to continue separately. The petitions were disposed of, and the next scheduled date was canceled.