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TMI Blog1988 (3) TMI 298X X X X Extracts X X X X X X X X Extracts X X X X ..... r direct. The appellants will have to obtain a separate order from the Additional Collector first on the question of project import rate. The Additional Collector, on being approached by the appellants should pass such order as early as possible. 2. The facts regarding the valuation dispute before us, in brief, are as follows, The appellants are an exporter of granite blocks and slabs. Before the granite rock or block is fed into the gang-saw machine for slicing into slabs, the four sides of the rock or block have to be slimmed to make them smooth. The machine, which is the subject of dispute before us, is used for this primary slimming. Before the import of this machine, the appellants were doing the slimming work manually which was not as good as the machine would give it. They spotted one second-hand machine lying idle with a Dutch party in Europe. The Dutch party had purchased this machine on 20.10.1980. They used it for over four years. The machine was dismantled by the Dutch party on 15.1.1985. The appellants showed interest in its purchase and the sale contract was concluded. The machine was shipped to the appellants on 20.12.1986. The appellants filed the requisite bill o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alued. He assessed the fA.I.R. value of the machine at Rs. 7,27,391/- for the purpose of assessment of customs duty. For such assessment of value, the Additional Collector proceeded under Section 14(l)(b) of the Customs Act, 1962 read with Rule 8 of the Customs Valuation Rules, 1963, i.e., on the basis of Best Judgment Assessment on original cost less depreciation for the period of use of the machine. Taking the same value for the purpose of the import licence, the licence value was found to be short by Rs. 6,44,791/-. The Additional Collector ordered confiscation of the machine under Section 111(d) of the Act and adjudged the fine for its redemption at Rs. 5 lakhs. He also imposed a penalty of Rs. 2 lakhs on the appellants under Section 112 of the Act. 3. During the hearing before us, the appellants pressed for the following three pleas :- (1) The declared price of Rs. 98,498.56 should be accepted as the true and bona fide price of the machine. (2) In the alternative, the original purchase price of the Dutch supplier should first be converted into rupees at the rate of exchange prevalent in October-November, 1980 and the depreciation allowed thereafter on such converted pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentative of the department that the declared price - at about 8% of the original purchase price - was too low; it could not be the true value of the machine and hence not acceptable as the basis of assessment of customs duty under Section 14(1) of the Act. And since no other similar second-hand machines were available for comparison of prices, there was no alternative to the lower authority except to take resort to the Best Judgment Assessment under Rule 8 of the Customs Valuation Rules, 1963 framed under Section 14(1) (b) of the Act. 5. It is not that the lower authority has done the Best Judgment Assessment on any whimsical basis; the authority has taken the original purchase price of the machine, given depreciation for the period of use and then converted the depreciated value into Indian currency at the rate of exchange as in force at the time of import. The proviso requiring adoption of the rate of exchange as in force at the time of import, no doubt, occurs below clause (a) of Section 14(1) and not below clause (b) thereof. But the clause (b) requires that the value determined thereunder should be the nearest ascertainable equivalent of the value in clause (a). This ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the original purchase price of the machine should be given to the appellants. In other words, 50% of the original purchase price should be taken as the basic price to which the usual additions for freight, insurance, landing charges etc. should be made. 7. The question then arises as to what value should be debited to the import licence. No doubt, there is no direct evidence of the appellants having remitted any extra foreign exchange towards the price of the machine. Yet, we are not convinced that such ridiculously low price as declared by them at about 8% of the original purchase price could be the bona fide and true price of the machine. So far as extra remittance is concerned, there are numerous indirect ways of doing it. The appellants were exporters of granite blocks and slabs. The foreign supplier was an importer of these goods. In such a situation, there is ample scope for price adjustments which, if done over a period of time, would not be noticed by anybody. Since we do not find the declared price as bona fide, we order that the value re-determined according to our observations in the preceding paragraph should be debited to the licence also. Bombay High Court judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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