2023 (9) TMI 1199 - AT - Customs

Classification of imported goods - Injection Moulding machine - enhancement of value - old and used goods or not - mis-declaring and -under valuing the imported goods - evasion of Customs Duty - HELD THAT - The matter pertains to injection moulding machine, which was described old and used by the party, and it was meant to be re- exported. However, the same it appears from the records and as confirmed by Advocate was never re-exported. During the course of investigation, party with consent had accepted enhanced value and discharged the duty, which was arrived at through the experts and by a Constituted Committee. Having accepted the enhanced value and paid duty on the same and not having re-exported the goods as was ascertained from the Advocate during the course of the hearing, there are no reason to disagree with the findings as far as valuation is concerned, as the same was based on an expert opinion after seeing the usage or otherwise of the machine and the value enhanced was accepted for release of the goods by the appellant themselves. The duty and interest therefore have been correctly paid. Mis-description - confiscation - penalty - HELD THAT - The goods even as per the party were used only to some extent, stated to be in some trial runs. The examination reports relied upon by the department, atleast some of them do mention possibility of such use. The authorities below have ousted the description of the party as given in the bill of entry on the ground that use in trial run cannot be equated with commercial use - the goods were not liable for confiscation on account of description, and also the valuation since same depended upon usage, which was arrived only through various expert opinions. And the party having willingly accepted the value once the condition and extent of usage became known to them cannot be subjected to penalty - the goods are not liable for confiscation in the specific facts of the case and penalty imposed cannot be sustained. The post importation conduct of the party of voluntarily accepting enhanced value, when extent of usage became known to them, while not imposing any penalty or upholding confiscation, sustain the order of the department as far as valuation and demand of duty and interest is concerned. Appeal partly allowed.

Summary

Issues Involved:
1. Valuation of imported goods.
2. Description of goods as "used" or "unused".
3. Confiscation and penalty.

Summary:

1. Valuation of Imported Goods:
The appellant imported an "Injection Moulding machine" declared as "Old and Used" with a value of USD 98,500. Upon examination, the machine appeared new and unused. Multiple expert reports estimated the machine's value between USD 130,000 and USD 145,000. The adjudicating authority re-determined the value to USD 130,000, leading to a differential duty of Rs. 5,64,012 and a redemption fine of Rs. 15,00,000. The appellant contested this valuation, arguing that the transaction value should be accepted under Rule 3 of the Customs Valuation Rules, 2007. However, the department's valuation was upheld based on expert opinions and the appellant's acceptance of the enhanced value during the investigation.

2. Description of Goods as "Used" or "Unused":
The primary issue was whether the machine was "used" or "unused." Initial examination reports indicated the machine was new, with some experts suggesting it might have been used for trial runs. The appellant argued that the machine was used for testing and trial runs, thus fitting the description of "used." The Tribunal found that conflicting expert opinions should benefit the appellant, accepting the machine as "used" based on trial runs. The Board Circular No. 25/2015-Cus, applicable to second-hand machinery, was also considered, supporting the appellant's description.

3. Confiscation and Penalty:
The adjudicating authority ordered the confiscation of the goods under Section 111(m) of the Customs Act, 1962, and imposed a penalty of Rs. 56,000 under Section 112(a). The appellant argued that the transaction value was correct and that the goods were intended for re-export. The Tribunal found that the goods were not liable for confiscation based on the description and the usage determined through expert opinions. Consequently, the penalty was not sustained, but the valuation and demand for duty and interest were upheld due to the appellant's acceptance of the enhanced value.

Conclusion:
The appeal was partly allowed. The Tribunal upheld the enhanced valuation and demand for duty and interest but set aside the confiscation and penalty, recognizing the machine as "used" based on trial runs and expert opinions.