9911796707
TMI Blog1996 (5) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... lue found in excess of the declared value as this value was not covered under EPCG licence produced by the appellants for the purpose of concessional rate of duty. In that case the goods were confiscated and allowed the same to redeem on redemption fine of Rs. 10,00,000/- and demanded duty on the value of Rs. 45,12,480/- not covered by EPCG licence made on merits as appropriate rate without extending the benefit of notification for concessional assessment under EPCG scheme. A penalty of Rs. 5,00,000/- is also imposed on the appellants. 2. After hearing both the sides, the operative portion of the order was announced in the open Court viz. `Appeals allowed with detailed order to follow . 3. The goods involved in these two appeals are Auto Coner Schlafhorst Winders Model 138 GRUCX 60 Spindles, Air Splicer, Uster W3 clearers, 5 Degree Cones - 2 Nos and Auto Coner Schlafhorst Winder Model 107 60 Spindles, Air Splice Uster Clearer, year 1969" - 1 No. The price declared by the appellants is US $ 20,000 CIF for each Auto Coner and were covered by the invoice issued by M/s. Republic Textile Equipment Company of South Corolina, USA. The year of manufacture of the machine as per the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt Policy 1992-97 with an export obligation for export of the goods valued at four times the CIF value of the goods allowed import within a period of 5 years from the date of issue of the licence. The total value of machinery allowed import under the licence was US $ 15,23,000/- and in the list of items allowed importation, the goods imported are one such item i.e. 6 Nos. of Auto Coners with total CIF value of US $ 1,20,000/-. He has pleaded that the appellants have been funded by the IDBI by way of loan to the extent of Rs. 400 lakhs. He has pleaded that the appellants negotiated the purchase of the second hand machinery for importation against the licence with the dealer in America who has a standing of over 60 years in the business of sale of second hand textile machinery. He has pleaded that the appellants negotiated with the suppliers for the sale of full range of the machinery for the manufacture of yarn for export purposes and thereafter the goods were imported at the negotiated price and invoiced for the purpose. He has pleaded that the appellants also obtained Chartered Engineer s Certificate showing the residual life of the machinery and also the prevailing price for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittee vide their certificate dated 14-9-1995 has certified as under : Based on the information and supporting documents/evidences supplied by you in connection with the import of second-hand capital goods as indicated in the enclosure (duly endorsed), it is hereby certified that the declared purchase price of US Dollars 15,23,000.00 (US Dollars Fifteen Lakhs twenty three thousand only), of items being imported, having a residual life of 07-15 (Seven-Fifteen) years, is reasonable. He has pleaded the list attached to the certificate also included the goods under import and the value of the same as declared by the appellants in the Bill of Entry has also been duly certified. He has pleaded that this certification by the Committee is a pre-requisite before issue of the licence in respect of import of capital goods where the value involved is over Rs. 100 crore. He has pleaded that the licence is issued only after the certification by the Committee. He has pleaded based on the certificate, the licensing authorities issued the licence. He has pleaded that the appellants had imported the items covered by the licence as certified by the STQC that the total value of US $ 15,23,000 CIF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the same goes to just over Rs. 10 lakhs. He has pleaded that in view of the corroborative evidence produced by the appellants in support of the value declared by them, the learned lower authority should have accepted the value under Section 14 of 1962 as representing the transaction value. He has pleaded that the learned lower authority has brushed aside the evidence produced by the appellants without any acceptable reason. He has pleaded about the offer of the manufacturer of the machine namely Schlarhorst has been held by the learned lower authority as merely an offer and therefore could not be accepted as indicative of the actual value of the machine. He has pleaded that the learned lower authority has gone on to observe that the price shown in this offer for the machines produced by them were US $ 1,09,864 and US $ 11,6000 and the learned lower authority has observed that the price being adopted by the Department was only US $ 80,000 which is lower and therefore it does not help the case of the appellants. He has pleaded that the learned lower authority should not have compared the price of the new machine as set out in the offer, which the learned lower authority has obs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be shown by him as to how the appellants transaction did not pass the muster of the parameters as set out under Section 14 of the Customs Act, 1962. He has pleaded that under Section 14, the invoice value is required to be accepted in case the goods are [sold] in the ordinary course of business for imports into India in the course of international trade where the sellers and the buyers have no interest in the business of each other and the price is the sole consideration. He has pleaded that the appellants transactions for import of the goods was in the ordinary course of international trade and nothing has been shown to say that the transactions as entered by the appellants was not so. He has pleaded that there is also no allegation or any evidence nor there is any finding of the learned Collector that the suppliers of the goods and the appellants had any interest in the business of each other. He has also pleaded that there is nothing on record to show nor any evidence produced nor there is any finding in regard to the supply of the goods that price was not the sole consideration. The appellants have paid the amount for the importation as set out in the invoice. Therefore he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the provisions of Rule 9 of these rules and cost incurred by the seller in sales in which he and the buyer are not related; (c) substitute values shall not be established under the provisions of clause (b) of this sub-rule." He has pleaded that the learned lower authority has not entered any finding with reference to the parameters set out in Para 4 that any one of these parameters had not been satisfied. He has pleaded that the learned lower authority while rejecting the appellants value has not given any reasons as to how in terms of Section 14 of [Customs Act] read with Valuation Rules as above, the value could not be accepted in terms of Rule 4 of the Valuation Rules. He has pleaded that the learned lower authority has merely gone by the fact that since goods of the same description had earlier been cleared through Tuticorin port and the value of the same declared as US $ 80,000 the value of the appellants goods should be also taken to be the same for customs purposes. He has pleaded that the importation of the goods relied upon by the learned lower authority for enhancing the value no doubt has been stated to have been imported from USA but the same were invoiced from U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed was also second hand and the price was comparable and therefore the earlier value of the machines as recorded for the earlier import has been rightly adopted for the basis for valuation of the present machine. 6. We have considered the pleas made by both the sides. We observe that the sole ground on which the value has been enhanced by the learned Collector is that similar machine imported earlier was invoiced at US $ 80,000 and the appellants price it has been held therefore was highly under-valued and the value of the goods therefore in terms of Rule 8 of the Valuation Rules had to be US $ 80,000. We observe that in a case where similar goods have been imported at a higher price earlier, the authorities on noticing the subsequent import at a lower price have reasons to entertain a doubt as to the correctness of the value of the subsequent import. When such a situation exists what is required to be done is that the authorities should investigate the circumstances of the import made earlier and also of the subsequent import and should as- certain as to the basis of the price of the earlier import and that of the subsequent import before arriving at any conclusion as to which o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 times CIF value 5 yrs Zero duty (in case CIF value is Rs. 20 crores or more) 6 times CIF value 8 yrs The export obligation shall be on FOB basis. However, in the case of zero duty imports, the licence holder may apply for fulfilment of the export obligation by exporting 4 times the CIF value of the capital goods on NFE basis within a period of 8 years. The provisions of paragraph 138 of this Policy shall apply for calculating the export obligation on NFE basis. Conditions for import ofcapital goods. 40. Import of capital goods under the scheme shall be subject to Actual User condition till the export obligation is completed. Both new and second hand capital goods may be imported under the scheme. In the case of import of second hand capital goods, the importer shall furnish to the Customs at the time of clearance of goods, a self declaration to the effect that the second hand capital goods being imported have a minimum residual life of 5 years in the prescribed form as given in Appendix XI of Handbook of Procedures (Vol. l ). However, if the CIF value of second hand capital goods is Rs. 1 crore a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Government of India for the specific purpose of certifying the reasonableness of the price as declared cannot be lightly brushed aside and unless a basis on facts could be laid due consideration and regard will have to be given to the certification done by the Committee. The learned Collector in this regard on a plea by the appellants that the value has been certified by the STQC in Paras 20 and 21 has observed as under : From the above, it is evident that the certification as to the reasonableness of the declared purchase price was done by the said authority of the Department of Electronics, Government of India on the basis of the information and supporting documents/evidences supplied to them by the importers inconnection with the import of the second-hand capital goods in question. In other words, no independent evidence relating to import of similar/comparable machinery as has been pointed out by the Customs House, Tuticorin was obviously made available to the said authority when the classification has been done. As regards the importer s claim regarding the Commerce Ministry having certified/accepted the value, it is the importers own admission in their reply to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary action by them for corrective steps. We find from the records that this was not done. In a case where a statutory committee has been assigned a function it is necessary to have the opinion of the said committee in case there is any doubt or there is a circumstance of doubt regarding what has been certified by them. This not having been done, the price as certified by the Committee cannot be discarded easily. It is observed that the appellants had produced Chartered Engineer s Certificate along with documents submitted to this Committee. The learned Collector has not cast any doubt about the veracity of the Chartered Engineer s Certificate on the basis of which the import of the other second hand machineries covered by the same certificate as such have been allowed import. The Chartered Engineer has certified the approximate value of the machine as also the residual life of the machines and also the year of manufacture of the same. Further the appellants on the doubt being raised by the authorities in regard to the valuation have produced a letter from the suppliers that they were prepared to sell the machines at the same price to any one. No enquiry has been made by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellants has to be taken as reflective of the transaction value. There is no allegation that there is any relationship other than normal business one between the suppliers and the appellants, and that the price was not the sole consideration nor there is any evidence that any extra remittances has been made by the appellants for the goods in question. The learned lower authority s sole reliance on the value of the goods imported by another importer cannot form a basis for enhancing the value unless it could be shown that price taking into consideration the price of the new machines and also various other parameters was not reflective of the correct transaction value. As mentioned earlier nothing is on record to show that how the price of the earlier importation can be taken to be reflective of the transaction value. No investigation has been shown to have been done by the authorities in regard to the said importation. The appellants have the right to test the basis of the price of the other machines which is imported at a higher price. The Department has not come on record in this regard. The said supplier in respect of the enquiries made by the appellants, vide their communic ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
