2019 (12) TMI 738 - AT - Customs

Valuation of imported goods - import of old and obsolete Aircraft - rejection of transaction/declared value - redetermination of value on the basis of contemporaneous import made at Nhava Sheva Port - Confiscation - redemption fine - penalty - HELD THAT - The appellant has imported these two aircrafts after obtaining permission from the Department of Civil Aviation and after getting a license from DGFT. The Department has re-determined the value only on the basis of alleged contemporaneous import through Nhava Sheva where the value was determined at ₹ 87,35,238/-. Further, at the time of making the statement, the Chairman of the Institute produced original invoice No.1709 dated 11.10.2008 from M/s J S Aviation showing total value of the goods at USD 201025 equivalent to ₹ 98,90,438/-. Further, the Adjudicating Authority has admitted that there is a difference in the year of manufacture of the aircraft imported in Nhava Sheva compares to the aircraft imported by the appellant. There are no reason for the Revenue to reject this transaction value - further, these aircrafts imported by the appellant is a junk and unworthy but useful for school of AME studies and there is not enough avionic equipments as per the report of the Chartered Engineer placed on record. The re-determined value of ₹ 1,60,14,576/- is not the correct valuation whereas the Customs duty should be assessed as per the invoice value of USD 201025 equivalent to ₹ 98,90,438/- - the impugned order set aside - case remanded back to the Customs Authorities to re-assess the value on the basis of original invoices placed on record - redemption fine and penalty upheld. Appeal allowed by way of remand.

Issues:
1. Valuation of imported goods.
2. Confiscation and redemption of goods.
3. Imposition of penalty under Customs Act, 1962.
4. Contemporaneous import valuation.
5. Adjudication based on Chartered Engineer's report.
6. Applicability of transaction value.
7. Assessment of Customs duty.

Valuation of imported goods:
The judgment dealt with the valuation of goods imported by an educational institute for training purposes. The appellant contested the re-determined value of the aircraft, arguing that they were junk and unworthy for flying but useful for educational purposes only. The Adjudicating Authority based the valuation on alleged contemporaneous imports through Nhava Sheva, which the appellant challenged as not providing crucial details like airworthiness, overhaul, and avionic equipment availability. The original invoice value presented by the appellant was USD 201025, equivalent to ?98,90,438, which the Revenue rejected. The Tribunal found that the re-determined value of ?1,60,14,576 was incorrect and instructed Customs Authorities to reassess based on the original invoice value.

Confiscation and redemption of goods:
The Commissioner of Customs had re-determined the value of the goods and ordered confiscation under Sections 111(d) & (m) of the Customs Act, 1962. The appellant was allowed to redeem the goods on payment of a fine of ?3,00,000 and duty at appropriate rates. The Tribunal found the redemption fine and penalty appropriate and upheld them without modification.

Imposition of penalty under Customs Act, 1962:
The Commissioner imposed a penalty of ?1,50,000 on the importer under Section 112(a) of the Customs Act, 1962. The appellant contested the penalty, but the Tribunal found it appropriate and did not require any modification.

Contemporaneous import valuation:
The value of the imported goods was re-determined based on alleged contemporaneous imports through Nhava Sheva, where the value was assessed at ?87,35,238. The appellant argued against this valuation method, stating that it lacked crucial details and was not comparable due to differences in circumstances. The Tribunal agreed with the appellant and set aside the re-determined value, instructing Customs Authorities to reassess based on the original invoice value provided by the appellant.

Adjudication based on Chartered Engineer's report:
The goods were subjected to examination by an independent Chartered Engineer who certified the aircrafts as more than 30 years old and unworthy for flying. The Chartered Engineer valued the aircrafts at 80,000 USD. The report played a crucial role in the adjudication process, highlighting the condition and value of the imported goods.

Applicability of transaction value:
The appellant argued that the transaction value of the goods should be accepted, as reflected in the original invoice from the supplier. The Tribunal agreed with the appellant, stating that there was no reason for the Revenue to reject the transaction value and instructed Customs Authorities to reassess based on the original invoice value.

Assessment of Customs duty:
The Tribunal concluded that the Customs duty should be assessed based on the original invoice value of USD 201025, equivalent to ?98,90,438, rather than the re-determined value. The case was remanded back to Customs Authorities for re-assessment in line with the original invoice value.

In summary, the judgment addressed issues related to the valuation, confiscation, redemption, and penalty imposition concerning imported goods, emphasizing the importance of accurate valuation methods and proper assessment criteria under the Customs Act, 1962.

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