2005 (3) TMI 371 - AT - Customs

Valuation (Customs) - Comparable imports - EXIM - DGFT clarification - contemporaneous Bill of Entry and Invoice - HELD THAT - The machines imported by the appellants are covered by this restriction. Therefore, their import, without licence; attracts Section 111(d) of the Customs Act. The confiscation of the machines under this provision of law cannot be faulted. The decision in BE-Office Automation 2004 (6) TMI 628 - CESTAT NEW DELHI , wherein second-hand photocopiers imported by the party was held to be capital goods and to be eligible for unrestricted import, cannot be followed in the facts of the present case inasmuch as it is not discernible from the cited order as to whether the import was during the same policy period as in the present case. As rightly pointed out by learned counsel, the Revenue has not shown that the transaction value negotiated between the appellants and the supplier was influenced by any consideration other than commercial or that any amount in excess of the said value was paid to the supplier. The Revenue has failed to establish; any ground under Rule 4(2) for rejecting the transaction value. In the circumstances, it is incumbent on the Customs authorities to accept the transaction value under Rule 4(1) r/w Section 14(1) of the Customs Act as consistently held by this Tribunal in a line of cases including Spice Communications (supra). For the reasons already noted, we set aside the enhanced valuation done by the Commissioner under Rule 8 and direct that the subject goods be assessed to duty on the basis of the transaction value declared by the importer. The Commissioner has imposed a fine of Rs. 7.09 lakhs for redemption of the confiscated goods valued at Rs. 47,31,375/- (C F). Now that the transaction value of Rs. 20,07,360/- (C F) of the goods stands accepted, the redemption fine requires to be reduced proportionately. We reduce the same to Rs. 3,00,000/- (Rupees Three lakhs only) after considering all relevant factors u/s 125. The Commissioner has imposed a penalty of Rs. 3.30 lakhs on the importer u/s 112(a) of the Customs Act. We have already rejected the Department's allegation of misdeclaration of value, though their charge that the importer committed breach of Foreign Trade Policy through import of office equipments without licence has been sustained. Therefore, the importer's penal liability gets reduced. Thus, we reduce the penalty to Rs. 75,000/- (Rupees Seventy-five thousand only). The impugned order is set aside on the valuation issue and upheld on the confiscation-related issues, but with reduction of quanta of redemption fine and penalty as above. The appeal is disposed of accordingly.

Summary

Issues Involved:
1. Rejection of Transaction Value
2. Confiscation of Goods
3. Imposition of Penalty

Issue-wise Detailed Analysis:

1. Rejection of Transaction Value:
The appellants imported "old and used incomplete HEAVY DUTY photocopier-CLC 700" from Singapore and declared the value based on the supplier's invoice and other supporting documents. The respondent directed an inspection by local Chartered Engineers who appraised the value significantly higher than declared. The Commissioner rejected the declared value, determining the value under Rule 8 of the Customs Valuation Rules (CVR) based on contemporary import prices. The appellants contested this, citing Supreme Court judgments in Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai and Tolin Rubbers Pvt. Ltd v. CC, Cochin, arguing that the declared value should be accepted unless valid grounds under Rule 4(2) are provided. The Tribunal found that the local Chartered Engineer's report, which led to the doubt about the declared value, was itself discarded by the adjudicating authority. Furthermore, the comparison with contemporary imports lacked proper basis as the year of manufacture and origin of the compared goods were not adequately matched. Consequently, the Tribunal directed that the subject goods be assessed to duty based on the transaction value declared by the importer.

2. Confiscation of Goods:
The Commissioner held that the second-hand photocopiers were not 'capital goods' and thus required a specific import license under the relevant EXIM Policy. The appellants' import without such a license was deemed in violation, leading to confiscation under Section 111 of the Customs Act. The Tribunal upheld this finding, noting that the DGFT's Policy Circular clarified the restriction on importing second-hand photocopiers without a license. The Tribunal distinguished this case from previous decisions where such photocopiers were considered capital goods, noting the applicability of DGFT's circular during the relevant period. Thus, the confiscation under Section 111(d) was upheld.

3. Imposition of Penalty:
The Commissioner imposed a penalty under Section 112(a) of the Customs Act, citing undervaluation and import without a license. The Tribunal, however, rejected the allegation of mis-declaration of value but sustained the charge of importing without a license. Consequently, the penalty was reduced from Rs. 3.30 lakhs to Rs. 75,000/- considering the sustained charge and the facts and circumstances of the case.

Conclusion:
The Tribunal set aside the enhanced valuation done by the Commissioner and directed assessment based on the declared transaction value. The confiscation of goods was upheld, but the quantum of redemption fine was reduced proportionately to Rs. 3,00,000/-. The penalty was also reduced to Rs. 75,000/-. The appeal was disposed of accordingly.