2022 (11) TMI 1194 - AT - Customs

Valuation of imported goods - rejection of declared value - restricted goods/prohibited goods - It appeared to Revenue that the goods involved is old hospital accessories are restricted in nature in terms of Sl. No. II (2.1) FTP 2015-20, which stipulates that import of Second Hand Goods other than capital goods are restricted in nature and can only be allowed subject to production of valid authorisation certificate issued by DGFT - appeal dismissed on the ground that the appeal has been filed on the 91st day, counted from 16.02.2018 being the service of the impugned order - Confiscation - redemption fine - penalty - HELD THAT - The appellant has definitely imported the restricted goods for use as capital goods to be installed in their Hospital/ Nursing Home. Further, it is found that the goods are not prohibited goods and as the goods are admittedly second hand goods, this falls under restricted goods under the FTP. It is further found that as the goods are admittedly more than ten years old, and under Rule 3(5) of the Cenvat Credit Rules, depreciation of 2.5% is available for each quarter on straight line basis on the capital goods. Thus, the value becomes NIL after ten years of user of capital goods. The rejection of transaction value is bad. Thus, the declared value is accepted. Thus, no differential duty is payable. However, the goods have been rightly held confiscable as the appellant did not have license to import. The order of confiscation under Section 111(d) is upheld. However, redemption fine is reduced to Rs. 50,000/-. Further, penalty under Section 112(a)(i) is reduced to Rs. 10,000/-. Appeal allowed.

Summary

Issues:
Import of restricted goods without proper authorization, valuation of imported goods, calculation of depreciation for capital goods, limitation period for filing appeal, confiscation of goods, imposition of penalty.

Analysis:
1. Import of Restricted Goods: The appellant imported old hospital accessories without the required authorization certificate from DGFT, as mandated by the FTP 2015-20. The goods were subjected to examination, and discrepancies were noted in the declared value, leading to suspicion regarding the true value of the goods.

2. Valuation of Imported Goods: The Chartered Engineer's report played a crucial role in assessing the value of the imported goods. The report considered factors such as the year of manufacture, depreciation based on the age of the goods, and the intended reuse of the equipment in hospitals or nursing homes. The Customs Inspector also verified the contents of the shipment.

3. Calculation of Depreciation for Capital Goods: The Tribunal noted that depreciation of 2.5% per quarter on a straight-line basis is applicable to capital goods under Rule 3(5) of the Cenvat Credit Rules. As the imported goods were more than ten years old, the depreciation resulted in a nil value, thereby accepting the declared value and eliminating the need for payment of any differential duty.

4. Limitation Period for Filing Appeal: The appellant challenged the dismissal of their appeal by the Commissioner (Appeals) on the grounds of a miscalculation in the filing date. The Tribunal considered this argument and allowed the appeal, emphasizing the importance of providing adequate opportunity for a fair hearing.

5. Confiscation of Goods and Imposition of Penalty: The original order-in-original had directed the confiscation of the goods under Section 111(d) and imposed a redemption fine and penalty. The Tribunal upheld the confiscation due to the lack of import license but reduced the redemption fine and penalty significantly, considering the circumstances of the case.

6. Final Decision: The Tribunal allowed the appeal in part, accepting the declared value of the goods and reducing the redemption fine and penalty. The appellant was granted consequential benefits as per the law. The judgment highlighted the importance of compliance with import regulations and the proper valuation of goods to avoid discrepancies and penalties.