2004 (5) TMI 172 - AT - Customs

Import of second-hand machinery - Undervaluation - Second-hand machinery - confiscation u/s 111 - penalty - HELD THAT - We find that the transaction value was supported by the foreign supplier's Chartered Engineer's Certificate, which evidence was rejected by the Commissioner for reasons which are not convincing. The department had no case that the foreign supplier's Chartered Engineer's Certificate was not genuine or authentic or that it was obtained fraudulently or that it was not relevant. The evidence in support of the transaction value, furnished by the importer through the said Certificate, has been rejected by the Commissioner on the basis of a subsequent opinion of another expert, which is not justifiable. The opinion of one expert cannot be rejected on the basis of that of another expert unless there is sufficient independent reason for such rejection. In this case, there is no such reason for rejecting the foreign supplier's Chartered Engineer's Certificate. It is also pertinent to note that, even after obtaining the domestic Chartered Engineer's opinion, the department made market enquiries, in which it was found that the value of the subject goods could be Rs. 14 lakhs as at the time of its manufacture. It is not known as to why the Commissioner did not rely on the market enquiry results to doubt the correctness of the domestic Chartered Engineer's valuation. In the result, we hold that the declaration, by the appellants, of year of manufacture as well as of the value of the imported second-hand machinery is liable to be accepted for all purposes. The declared value (transaction value) is liable to be accepted in terms of Section 14 of the Customs Act for assessment of the goods for duty of Customs. There being no misdeclaration on the part of the appellants, the order of confiscation and penalty cannot be sustained. Accordingly, the order of the Commissioner is set aside and this appeal is allowed.

Summary

Issues involved: Import of second-hand machinery, undervaluation, confiscation under Section 111, penalty under Section 112 of the Customs Act, 1962.

In the present case, the appellants imported second-hand machinery, "Rieter C 1/3 Model Carding Machines," declaring a value of USD 27,000 and a year of manufacture as 1994. Customs authorities found the machinery to be old and used, estimating its value at Rs. 32,40,000. The authorities believed the machinery was over 10 years old, requiring a specific import license. The goods were deemed undervalued to evade Customs duty, leading to confiscation under Section 111 and a penalty under Section 112. The Commissioner upheld this decision, ordering enhancement of the machinery's value, confiscation, and imposing a penalty on the importers.

Upon review, it was found that the importer had provided a Certificate from the Chartered Engineer of the foreign supplier, certifying the year of manufacture, purchase from a dealer, residual life, and reasonable values. The Commissioner rejected this Certificate, citing lack of evidence and overlooking the fact that the goods were imported from a dealer, not a manufacturer. The Commissioner also dismissed the transaction value based on a subsequent opinion of a domestic Chartered Engineer, despite the initial foreign supplier's Certificate supporting the value. The department's market enquiries indicated a value of Rs. 14 lakhs at the time of manufacture, which was not considered by the Commissioner.

Referring to a similar case law, it was concluded that the importer's declaration of the year of manufacture and value should be accepted. The transaction value was deemed fair and reasonable, in accordance with Section 14 of the Customs Act. As there was no misdeclaration, the confiscation and penalty were deemed unjustified. Consequently, the Commissioner's order was set aside, and the appeal was allowed.