2004 (11) TMI 204 - AT - Customs

Summary

Issues Involved:
1. Rejection of overseas Chartered Engineer's certificates.
2. Reliance on domestic Chartered Engineer's reports.
3. Determination of the 'year of make' of imported machinery.
4. Allegation of undervaluation of imported goods.
5. Confiscation of goods and imposition of penalties under the Customs Act.
6. Acceptance of transaction value for customs duty assessment.

Issue-wise Detailed Analysis:

1. Rejection of Overseas Chartered Engineer's Certificates:
The appellants contended that the Commissioner did not provide any reason for rejecting the overseas Chartered Engineer's certificates, which certified the 'year of make' as December 1993 and the transaction value of the goods. The Tribunal found that the Commissioner had not discredited the findings of the overseas Chartered Engineer and had instead relied on the domestic Chartered Engineer's reports without sufficient justification.

2. Reliance on Domestic Chartered Engineer's Reports:
The domestic Chartered Engineer's reports, which estimated the value of the machines based on physical examination, market enquiries, and previous inspections, were challenged. The Tribunal noted that the Chartered Engineer's methods and findings were not supported by documentary evidence or reliable market enquiry data. Furthermore, the Chartered Engineer admitted to not being registered with the Department and lacking documentary proof for his conclusions, making his reports unreliable.

3. Determination of the 'Year of Make' of Imported Machinery:
The importers' letters to the DRI indicated that the machines were manufactured before 1993, contradicting the declared 'year of make'. However, the Tribunal observed that these statements and letters were given to expedite clearance and did not preclude the appellants from contesting the valuation. The Tribunal emphasized that the overseas Chartered Engineer's certificates, which were not convincingly discredited by the Commissioner, should be accepted as evidence of the 'year of make'.

4. Allegation of Undervaluation of Imported Goods:
The Department alleged that the goods were undervalued based on the domestic Chartered Engineer's higher valuation. The Tribunal found that the transaction value declared in the invoices, supported by the overseas Chartered Engineer's certificates, should be accepted. The Tribunal referenced previous decisions, including the Supreme Court's ruling in M/s. Eicher Tractors Ltd. v. C.C., Mumbai, which upheld the transaction value when supported by credible evidence.

5. Confiscation of Goods and Imposition of Penalties under the Customs Act:
The Commissioner had ordered the confiscation of the goods under Section 111(d) & (m) of the Customs Act and imposed penalties under Section 112(a) based on the findings of misdeclaration and undervaluation. The Tribunal concluded that there was no misdeclaration by the appellants, as the transaction value and 'year of make' declared were supported by the overseas Chartered Engineer's certificates. Consequently, the orders of confiscation and penalties could not be sustained.

6. Acceptance of Transaction Value for Customs Duty Assessment:
The Tribunal held that the transaction value declared in the invoices, supported by the overseas Chartered Engineer's certificates, should be accepted in terms of Section 14 of the Customs Act. The Tribunal referenced its earlier decisions in similar cases, such as Anish Kumar Spinning Mills and DTE Exports Private Ltd., where the transaction value of imported second-hand machinery was accepted based on credible Chartered Engineer's certificates.

Conclusion:
The Tribunal set aside the Commissioner's orders, accepting the transaction value declared by the appellants and rejecting the domestic Chartered Engineer's reports. The appeals were allowed, and the orders of confiscation and penalties were overturned.