1989 (10) TMI 163 - AT - Customs

Summary

Issues:
1. Mis-declaration of value and contravention of I.T.C. regulations in the import of a secondhand machine.
2. Determination of assessable value based on the nature of the imported machinery.
3. Justification of valuation method by the Additional Collector.
4. Application of Section 14(l)(a) of the Customs Act in determining the deemed value.
5. Burden of proof on the department in cases of mis-declaration of value.

Analysis:

Issue 1: Mis-declaration of value and contravention of I.T.C. regulations
The appeal was directed against an order passed by the Additional Collector of Customs, Bombay, regarding the import of a secondhand Automatic Machine Type SPM-61 from Switzerland. The imported machine was initially declared as secondhand but was found to be brand new upon examination, leading to proceedings for mis-declaration of value and contravention of I.T.C. regulations. However, after detailed investigations and consideration of evidence, it was concluded that the importer genuinely obtained the goods at the price shown in the invoice, dropping the charges of mis-declaration and contravention of regulations.

Issue 2: Determination of assessable value
The Additional Collector enhanced the assessable value of the imported machine to Rs. 5,78,180 based on the price offered for a similar machine by the manufacturer in 1978. The appellants contested this valuation, arguing that the machine was secondhand, and the value should have considered depreciation. The tribunal agreed with the appellants, emphasizing that the year of manufacture and the change of ownership indicated that the machine was not new, and the value should have been determined accordingly.

Issue 3: Justification of valuation method
The learned Advocate for the appellants contended that the Additional Collector erred in determining the value as that of a new machine, despite acknowledging that it was secondhand. The tribunal concurred, stating that the Additional Collector should have provided positive proof of the deemed value of the secondhand machine at the relevant time, rather than relying on the value of a new machine from a prior year.

Issue 4: Application of Section 14(l)(a) of the Customs Act
The tribunal highlighted that while the agreed price between parties is relevant, duty must be levied based on the deemed value as per Section 14(l)(a) of the Customs Act. However, the burden of proving mis-declaration of value lies with the department, requiring concrete evidence discrediting the price mentioned in the Bill of Entry, not mere suspicion.

Issue 5: Burden of proof on the department
The tribunal emphasized that the department must provide substantial evidence to establish mis-declaration regarding the value declared in the Bill of Entry. In this case, the evidence suggested that the price was agreed upon after normal negotiations and was deemed the proper value under Section 14(l)(a) of the Act, leading to the allowance of the appeal in favor of the appellants with consequential relief.

In conclusion, the tribunal held that the price shown in the invoice was the correct value for the imported secondhand machine, emphasizing the importance of proper valuation methods and burden of proof in cases of mis-declaration of value during imports.