2003 (6) TMI 140 - AT - Customs

Summary

Issues Involved:
1. Confiscation of goods.
2. Determination of the age of imported machinery.
3. Acceptance of foreign Chartered Engineer's certificates.
4. Rejection of declared transaction value.
5. Enhancement of the value of goods.
6. Imposition of penalties.

Issue-wise Detailed Analysis:

1. Confiscation of Goods:
The Commissioner of Customs, Visakhapatnam, confiscated the goods imported by M/s. Hoogly Mills Project Ltd. under four separate orders-in-original, with an option to redeem the same on payment of fine and penalty. The appellants challenged the confiscation, arguing that the Commissioner's decision was based on incorrect findings regarding the age of the machinery and mis-declaration of value.

2. Determination of the Age of Imported Machinery:
The appellants imported used/second-hand jute mill machinery, declaring the year of manufacture as 1992, 1993, and 1994, supported by certificates from foreign Chartered Engineers. The Commissioner, however, found that certain parts of the machinery were manufactured much earlier, based on the inspection report by M/s. SGS India Pvt. Ltd., which indicated that parts such as motors, switchboards, and electrical items were more than 10 years old. The appellants contended that the Commissioner's rejection of the foreign Chartered Engineer's certificate was without basis and that the machinery, as a whole, should not be confiscated based on the age of certain parts.

3. Acceptance of Foreign Chartered Engineer's Certificates:
The appellants argued that the Commissioner accepted the value of the new machinery as certified by the foreign Chartered Engineer but rejected the certificate regarding the year of manufacture. They cited Circular No. F. No. 493/124/86-Customs (Sea), dated 19-11-1987, which directed the acceptance of certificates issued by foreign Chartered Engineers. The Tribunal observed that a certificate cannot be accepted in part and rejected in part, and the Commissioner's selective acceptance was not justified.

4. Rejection of Declared Transaction Value:
The Commissioner rejected the transaction value declared by the appellants under Rule 4 of the Customs Valuation Rules (CVR), 1988, and determined the value under Rule 8, alleging mis-declaration. The Tribunal noted that the department did not prove any flow of consideration or mutuality of interest between the sellers and buyers to justify the rejection under Rule 4(2). The Tribunal held that the rejection of the transaction value was not correct and there was no mis-declaration by the appellants.

5. Enhancement of the Value of Goods:
In some appeals, the Commissioner enhanced the value of the goods by 25% to 33.33%, based on the report by M/s. SGS India Pvt. Ltd., which suggested that the declared value appeared to be low by around 30% to 35%. The appellants argued that the enhancement was without basis and that the value declared was in line with the maximum depreciation allowable for old and used machinery. The Tribunal found that the enhancement was not justified as the transaction value should have been accepted.

6. Imposition of Penalties:
The Commissioner imposed penalties on the appellants along with the fine for redemption of confiscated goods. The Tribunal set aside the imposition of penalties, holding that the confiscation of the entire machinery was not warranted merely because certain parts/accessories were found to be more than 10 years old. The Tribunal cited the Supreme Court judgment in K.R. Steel Union Ltd. v. CC, which held that new parts constituting a small percentage of the total value imported along with second-hand machinery did not contravene the import policy.

Conclusion:
The Tribunal allowed the appeals, set aside the orders of confiscation, levy of fine, and imposition of penalties, and held that the rejection of the foreign Chartered Engineer's certificate and the declared transaction value was not correct. The cross-objection filed by the department was also disposed of accordingly.