1999 (5) TMI 308 - AT - Customs

Summary

Issues:
Valuation of second hand and used machines - application of Customs Valuation Rules - rejection of declared transaction value - consideration of Chartered Engineer's certificate - applicability of Section 14 and Valuation Rules 4(2) and 4(3) - contemporaneous imports at higher price - proof of fraud in transaction.

Analysis:
The judgment by the Appellate Tribunal CEGAT, MADRAS pertains to the valuation of two second hand machines, a Mixing Mill, and a six inches NRM Extruder, imported under two Bills of Entry dated 21-7-1993. The issue revolved around the rejection of the declared transaction value by the Custom House, which applied Rule 8 of the Customs Valuation Rules, depreciating the price of new goods based on a Chartered Engineer's certificate. The appellant contended that the rejection was not in line with Section 14 and Valuation Rules 4(2) and 4(3) as there was no evidence of fraud or illegal payments, nor any proof of contemporaneous imports at higher prices. The appellant cited precedents where transaction value supported by a Chartered Engineer's certificate was upheld unless fraud or higher contemporaneous imports were proven.

The Tribunal analyzed the submissions and noted that the issue had been previously addressed in similar cases. Referring to the decision in Rugmini Ram Raghav Spinners Pvt. Ltd., the Tribunal established that the valuation of second hand machinery should not automatically discard the transaction value under Rule 4, especially when supported by a Chartered Engineer's certificate. The Tribunal emphasized that rejection of the transaction value must be based on evidence of contemporaneous imports at higher values or proof of abnormal trade practices, which were absent in this case. The Tribunal highlighted the importance of challenging the transaction value with strong evidence before resorting to subsequent valuation rules.

Applying the legal principles established in previous cases to the present matter, the Tribunal concluded that the rejection of the transaction value without sufficient grounds was unjustified. The Tribunal set aside the Order-in-Appeal and allowed the appeal, emphasizing the primacy of transaction value unless proven otherwise by concrete evidence of fraud or abnormal trade practices. The judgment underscored the importance of adhering to Section 14 and Rule 4 before resorting to other valuation rules, ensuring a fair and evidence-based approach to customs valuation of imported goods.