2003 (9) TMI 229 - AT - Customs

Summary

Issues:
1. Confiscation of second-hand machineries imported by the appellant
2. Enhancement of value from US $ 22,247 to US $ 72,810 under Rule 8 of the Customs Valuation Rules, 1988

Analysis:

Issue 1: Confiscation of second-hand machineries imported by the appellant
The appellant contested the order of confiscation of second-hand machineries imported by them, which were subject to a specific licensing requirement for second-hand capital goods over 10 years old. The department rejected the declared value in the invoices and Bills of Entry, leading to a reassessment by a Chartered Engineer. The value was revised to US $ 70,010 after allowing a maximum depreciation of 70%. The Commissioner upheld this method of valuation based on guidelines issued by the CBEC, citing a Supreme Court judgment that endorsed the depreciation method for valuing second-hand machinery. The Commissioner concluded that the declared value was manipulated to evade duty, justifying the confiscation of the goods under Section 111(m) of the Customs Act, 1962. Additionally, the absence of a valid import license rendered the goods liable to confiscation under Section 111(d) of the Customs Act, 1962, attracting penal provisions under Section 112(a) of the Act.

Issue 2: Enhancement of value from US $ 22,247 to US $ 72,810 under Rule 8 of the Customs Valuation Rules, 1988
The appellant challenged the enhancement of the value of imported machineries from US $ 22,247 to US $ 72,810 under Rule 8 of the Customs Valuation Rules, 1988. The appellant argued for acceptance of the transaction value declared in the invoices, referring to previous judgments where transaction value was accepted. However, the department justified the enhancement based on the depreciation method endorsed by the Supreme Court and guidelines issued by the CBEC. The Tribunal upheld the Commissioner's decision, stating that the depreciation method was appropriate and in line with the Supreme Court's ruling. The Tribunal found no fault in the penalty imposed, considering the significant increase in value from the declared amount to the revised value. The minimal redemption fine and penalty imposed were deemed appropriate, leading to the dismissal of the appeal.

In conclusion, the Tribunal affirmed the Commissioner's decision, upholding the confiscation of the imported second-hand machineries and the enhancement of their value under Rule 8 of the Customs Valuation Rules, 1988. The Tribunal found the depreciation method for valuation to be valid, in accordance with legal precedents, and confirmed the penalty imposed as reasonable given the circumstances.