1991 (6) TMI 148 - AT - Customs

Issues Involved:
1. Assessable value of goods purchased in Government auction.
2. Alleged under-invoicing and mis-declaration.
3. Validity of the Import Trade Control Licence.
4. Violation of principles of natural justice.
5. Competency of the expert panel in assessing the value of goods.
6. Determination of assessable value under Section 14(1) of the Customs Act.
7. Applicability of Rule 8 of the Customs Valuation Rules.

Detailed Analysis:

1. Assessable Value of Goods Purchased in Government Auction:
The appellants imported machinery and accessories under invoices dated 9th December 1982 and filed bills of entry on 18th December 1982, declaring specific values. The goods were damaged during transit and were cleared after a survey. The Customs authorities appointed a panel of machinery experts to ascertain the correct description, quantity, condition, and assessable value of the goods. The panel's report led to a show cause notice alleging under-invoicing and mis-declaration. The Collector exonerated the appellants under Section 111(m) but confiscated the goods under Section 111(d), subject to a redemption fine, and enhanced the value based on the expert panel's report.

2. Alleged Under-Invoicing and Mis-Declaration:
The Collector found no reason to doubt the auction price but noted that the goods were disposal goods sold in distress sale. The Import Trade Control Licence produced was valid only for new goods, not for the goods in question. The appellants did not provide evidence to contradict the panel's appraised value, which was accepted for assessment purposes. The Collector concluded that there was no offense under Section 111(m) but an offense under Section 111(d).

3. Validity of the Import Trade Control Licence:
The Collector held that the Import Trade Control Licence was valid only for new goods, and since the goods were disposal goods sold in distress sale, the licence was not valid for the imported goods. This led to the confiscation of the goods under Section 111(d).

4. Violation of Principles of Natural Justice:
The appellants contended that the failure to furnish the entire report of the expert panel amounted to a violation of principles of natural justice. They argued that the expert panel's report, which formed the basis for enhancing the value of the imported goods, was not fully disclosed to them. The Collector's order was challenged on the grounds of this procedural lapse.

5. Competency of the Expert Panel in Assessing the Value of Goods:
The appellants questioned the qualifications of the expert panel members, arguing that they were not competent to assess the condition and performance capability of the imported machinery. However, it was noted that the appellants had not raised any objections to the panel's constitution during the examination of the goods.

6. Determination of Assessable Value under Section 14(1) of the Customs Act:
The main issue was the determination of the assessable value. Under Section 14(1), the value of imported goods is the price at which such or like goods are ordinarily sold in the course of international trade. The Collector determined that the auction sale by the Government could not be treated as a sale in the ordinary course, and thus, the price did not represent the value under Section 14(1).

7. Applicability of Rule 8 of the Customs Valuation Rules:
Since the price under Section 14(1) was not ascertainable, the Collector assessed the goods under Rule 8 of the Customs Valuation Rules. The expert panel's report, which was not fully disclosed to the appellants, formed the basis for this assessment. The appellants argued that the failure to provide the full report violated principles of natural justice, as they could not effectively challenge the values determined by the panel.

Conclusion:
The appeal was allowed by remand. The order of the Additional Collector was set aside, and the case was remanded for redetermining the assessable value after furnishing a copy of the Expert Panel Report to the appellants and giving them a reasonable opportunity to be heard. The failure to supply the report was deemed a violation of principles of natural justice, necessitating a reassessment of the goods' value.

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