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TMI Blog1992 (1) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... hines. 2.2 Both the machines were examined on 1-6-1990 by the officers of the Customs under SIB supervision when they were found to be second-hand as declared. Later on, it appears that on the basis of a complaint the said machines were re-examined on 10-7-1990. On the basis of the said re-examination and further enquiry from M/s. MSL Graphics, New Delhi, the local agents of the manufacturers of the two machines, a show cause notice dated 3-7-1990 was issued by the Assistant Collector of Customs, SIB, alleging that the value declared by the appellants was not acceptable and that the value proposed to be enhanced, as indicated in the said show cause notice. On 20-7-1990 the Assistant Collector issued an addendum to the said show cause notice wherein the value of the said two machines was sought to be revised. On the basis of the allegation made therein, it was alleged that the total assessable value of both the machines worked out to Rs. 24,53,428.40 after giving the permissible depreciation as against the total declared value of Rs. 14,50,027.00. It was, therefore alleged that there was under-valuation to the extent of Rs. 10,03,400/- and attempt to evade duty to the extent of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also upheld for the purposes of assessment to duty. 3. The appellants learned advocate has assailed the impugned order on several counts. His first plea is that there is a certificate of experts who have examined and inspected the machines and have given the certificate of reasonableness of the price of the two machines. These certificates support the transaction value which has passed between the supplier and the appellant concern. Prima facie there is nothing to doubt these transaction values. On the other hand, he has submitted that the adjudicating authority has merely gone on surmises and conjectures and on the basis of practice regarding depreciation which has no sanction behind it of the law. He has submitted that no evidence of the import of new machines at the prices which have been taken as the basis of the allegation either in 1976 or 1983 has been adduced by the department. Merely on the basis of a letter from the local agents the prices of the two machines in the years of their manufacture cannot be assumed in the absence of contemporaneous imports. He has further submitted that prices of capital goods generally include hefty commission to the local agent payable b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch was accepted by the suppliers by their letter dated 16-3-1990 splitting the offer at 49,000 + 3,000 for the offset printing machine and paper folding machine respectively. It is also apparent from the correspondence and the Chartered engineers that the appellants had placed the order with the suppliers for 1983 model of the offset printing machine. No mala fides can, therefore, be attributed to the appellants for importing the offset printing machine of an older model i.e. 1976 and thus contravened Para 30 of the 1988-91 ITC Policy. In the overall facts and circumstances, it has, therefore, been submitted by the appellants learned advocate that there is no cause for confiscation of the machines either under Section 111(m) or of the offset printing machine under Section 111(d) of the Customs Act. Consequently there is no case for imposing any penalty at all on the appellants. 3.2 The learned advocate has further submitted that the impugned order in any case suffers from an illegality inasmuch as it imposes a penalty both on the proprietary concern and on the proprietor herself. There is unity of interest between the proprietary concern and the proprietor and both cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat account can be given. He, therefore, submits that there is a good case in so far as the enhancement of under-valuation is concerned. As regards the confiscation and penalty, the learned JDR has submitted that these transactions between the supplier and the buyer here in the country took place under cover and it cannot be proved always that there has been an extra payment under hand. This aspect has been recognised by the Tribunal in the case of Mecneill Magor Ltd. v. C.C., Calcutta [1987 (28) E.L.T. 318] relied upon by the adjudicating authority in the impugned order. He has further submitted that since the Chartered Engineers Certificate has been found to be wrong, inference of mala fide of the appellants has been rightly drawn by the adjudicating authority. In short, he submits that there is no substance in the appeal and the impugned order be upheld. 4.1 In his rejoinder, the learned advocate for the appellants has submitted that the citation relied upon by the adjudicating authority and reiterated by the learned JDR in the case of Wax Wax Products, mentioned supra, refers to price list of new goods. It does not refer to prices regarding second-hand machines. He, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years i.e. from 1976. It is also certified in the said certificate that the machine utilises the current generation of technology and, therefore, compares with the latest machinery available in the international market. Having regard to the aforesaid comments/ assessments of the Chartered Engineers it is clrear that the machine has still residual expected life of 10 to 12 years over the total life span of 25 to 26 years. Keeping the life span of the machine in view and the expected residual life, as certified by the Chartered Engineers - M/s. Arcadia Printing Graphic Machinery (T. Thomas) the depreciation of 70% allowed by the adjudicating authority on the price of the new goods in the year of its manufacture, cannot be said to be unreasonable at all. In our view, it is more than reasonable. 5.1 Similar comments and assessment of the said Chartered Engineers have been made in respect of the second-hand machine i.e. paper folding machine. In the case of this machine the year of manufacture admittedly is 1983 i.e the machine had been used at the most for 7 years prior to its inspection and the expected residual life is estimated at 10 to 12 years. Thus for a total span of life of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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