1988 (5) TMI 290 - Commissioner - Customs

Summary

Issues: Valuation of car for customs purposes, depreciation beyond fourth year, determination of assessable value

In the judgment delivered by the Collector of Customs (Appeals), New Delhi, the appellant, represented by Shri P.R. Dastidor, contested the valuation of a second-hand car for customs purposes. The appellant argued that the Assistant Commissioner (A.C.) erred in disregarding the depreciation of the car beyond the fourth year of its use. They claimed that the A.C. should have considered the valuation of the car provided by the company from which it was purchased, as well as the market value based on a printed catalogue. The appellant emphasized that depreciation should be allowed beyond the fourth year, proposing a specific depreciation rate for each subsequent year. They also challenged the A.C.'s conclusion that no depreciation was necessary due to the car's good condition, asserting that the mere year of manufacture itself significantly depreciates a car's value.

Upon reviewing the facts of the case, the Collector noted that the car's valuation was based on the ex-work price from a 1979 catalogue, with depreciation allowed only for the first four years. Despite the car's good condition and lack of visible damage, a technical issue post-importation was considered in the assessment. The Collector acknowledged the appellant's argument that depreciation continues beyond the fourth year, as a car's value naturally decreases with age. Recognizing the car's seven-year age at importation, substantially exceeding the four-year depreciation limit, the Collector concluded that some ad hoc depreciation beyond the fourth year was warranted. However, a fixed scale for depreciation was deemed inappropriate, and a case-specific, ad hoc depreciation approach was deemed suitable.

In the final decision, the Collector determined a reasonable depreciation modality for the car, allowing 4% depreciation for the fifth year, 3% for the sixth year, and 2% for each successive year thereafter. Consequently, the original assessment order was set aside, and a reassessment was directed based on the newly established depreciation formula, providing relief to the appellant in the customs valuation of the car.