1992 (3) TMI 219 - AT - Customs

Summary

Issues:
1. Enhancement of value of imported secondhand machinery based on depreciation rate.
2. Arbitrary enhancement of value by the Assistant Collector.
3. Lack of expert evidence in determining the enhanced value.
4. Validity of Chartered Engineer's certificate in assessing declared value.

Issue 1: Enhancement of value of imported secondhand machinery based on depreciation rate

The case involved the appellant company importing secondhand machinery with declared and enhanced values. The Assistant Collector enhanced the value based on factors like the purpose of installation, environment, and operator skill level. The Assistant Collector applied a depreciation rate of 7% per annum for eight years to determine the enhanced value. The original authority noted a significant difference in the value of one machine compared to others due to depreciation. The appellants' first appeal before the Collector of Customs (Appeals) was unsuccessful, leading to the appeal before the Tribunal.

Issue 2: Arbitrary enhancement of value by the Assistant Collector

The appellant argued that the enhancement of value was arbitrary, questioning the basis for adopting an 8% depreciation rate. The appellant contended that the declared values were certified by a Chartered Engineer and should be accepted in the absence of contrary evidence. The appellant highlighted discrepancies in the depreciation rates used and challenged the lack of precise factors for determining the value of secondhand machinery. The appellant also criticized the Assistant Collector's examination and lack of expert evidence in valuation.

Issue 3: Lack of expert evidence in determining the enhanced value

The Tribunal found merit in the appellant's argument that the enhancement in value by the Assistant Collector was arbitrary and lacked expert evidence. The Tribunal noted that the Assistant Collector assumed the role of an expert in evaluating secondhand machines without providing detailed reasoning for the depreciation rate used. The Tribunal emphasized the need for expert examination to consider relevant factors affecting the value of secondhand machinery. The absence of evidence from an expert in valuation was a crucial factor in the Tribunal's decision to allow the appeal.

Issue 4: Validity of Chartered Engineer's certificate in assessing declared value

The appellant's reliance on the Chartered Engineer's certificate to support the declared values was considered by the Tribunal. The Tribunal acknowledged the certificate as evidence of the declared value's fairness, especially in the absence of contradicting evidence from the Department. The Tribunal's decision to allow the appeal was influenced by the Chartered Engineer's certificate and the lack of expert evidence provided by the Department to justify the enhanced value. Ultimately, the Tribunal concluded that the Department's enhancement of value was arbitrary and lacked substantial evidence, leading to the decision in favor of the appellants.