1998 (8) TMI 250 - AT - Customs

Summary

Issues:
The appeal concerns the correct application of Rule 8 of Customs Valuation Rules in relation to the transaction value of a second-hand 5 colour specified offset printing machine imported with an invoice value of Australian Dollars 47,000, which was rejected due to discrepancies in the Chartered Engineer's certificate regarding the year of manufacture.

Decision Details:
1. The Respondent argues that the error in the Chartered Engineer's certificate regarding the year of manufacture is sufficient grounds to reject the invoice value, citing ITC policy AM 82-87 and previous tribunal orders supporting the depreciation value methodology under Rule 3.
2. The Appellant contends that the minor error in the certificate does not warrant discarding the transaction value under Rule 4, as no evidence of fraud or illegal payments exists, and the conditions for rejection under Rule 4 are not met.
3. The Tribunal finds that the transaction value cannot be discarded without clear evidence of fraud or illegitimacy, as per Section 14 and Rules 3 & 4, which do not exclude second-hand machinery from transaction value application.
4. The Tribunal rejects the Department's valuation under Rule 8, as the error in the certificate does not automatically invalidate the invoice value, especially when negotiations were based on physical inspection and no evidence of fraud exists.
5. The relevance of a designated engineering agency's certificate for goods over Rs. 1 crore under ITC policy is deemed irrelevant to customs valuation under Section 14.
6. Previous tribunal orders are distinguished, emphasizing the importance of following Rules 4 to 7 before resorting to depreciation methods like Rule 8 for second-hand machinery valuation.
7. The Tribunal sets aside the impugned order, concluding that the declared transaction value should be accepted in law, and allows the appeal with any consequential relief.

Final Decision:
The Tribunal rules in favor of the Appellant, setting aside the impugned order and allowing the appeal based on the correct application of Customs Valuation Rules and the acceptance of the declared transaction value for the second-hand machinery.