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TMI Blog2002 (10) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... pplier for quite a few years were sold to the appellant. Though it cannot be claimed that the machine under import is customs - built for the appellant, the very fact that these are second-hand goods would show that there cannot be any sale of such or like goods. I would rather agree with the appellant s argument that if this argument were to be accepted, then there cannot be any assessment of custom built machines/goods as there cannot be any sale of such or like goods. What is to be seen is whether the transaction value is acceptable or otherwise as per the provisions of Section 14 read with the Valuation Rules. The Hon ble Supreme Court of India in the case of Eicher Tractors v. CC, Mumbai has clearly laid down that transaction value in Rule 4 of the Valuation Rules is limited to the transaction in question and that this mandate is only subject to certain exceptions specified in Rule 4(2) . The Hon ble Apex Court has held that the term ordinarily sold in Section 14(1) of the Customs Act implies the exclusion of extra ordinary or special circumstances as detailed statutorily in Rule 4(2). I feel it is also pertinent to quote from in the decision in the case of RRR Spinners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the same is not in conflict with the other rulings of the Apex Court rendered in the case of Eicher Tractors, 2000 (122) E.L.T. 321 (S.C.). 3. We have heard ld. SDR and Shri S.S. Radhakrishnan, ld. Counsel for the respondent. 4. Ld. SDR argued by reiterating the grounds and the findings recorded by the Dy. Commissioner in the Order-in-Original and prayed for setting aside the impugned order. 5. On the other hand, ld. Counsel produced catena of case law and also written submissions in support of his plea that Section 14 read with Rule 4 recognizes the primacy of the transaction value whether it be new goods or second hand machines and in this regard referred to Tribunal judgment rendered in Rugmini Ram Raghav Spinners Pvt. Ltd. - 1998 (103) E.L.T. 366 (T). He contended that the stand of the department that in the case second hand machinery, the value depends on its age and usage and therefore the transaction value under Rule 4 cannot at all be considered since sub-rule 2(b) of Rule 4 states that sale price is not acceptable where the sale price is subject to some conditions and other considerations. This is a ground taken up by the department on gross lack of understanding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a used and old second-hand machine which was purchased by the appellant after negotiation and the negotiated price is the only sale price for fixing the value and not the depreciation method and hence he prayed for dismissing the appeal. 6. On a careful consideration of the submissions, we notice that this issue is no longer res integra and the matter has been considered over and again in large number of judgments. In the case of Rugmani Raghav Spinners Pvt. Ltd. v. CC, Chennai (supra) the Tribunal after looking into various judgments of the Tribunal clearly held that the transaction value cannot be rejected. It is only when there is no transaction value, then valuation can be adopted by depreciation method. In the present case, there was a clear transaction value arrived at and there was an invoice. Therefore, the rulings relied by the Commissioner (Appeals) as noted supra would apply to the facts of the case. 7. Likewise, in the case of Essar Graphics (P) Ltd. v. CC, Chennai, 1999 (107) E.L.T. 94 (T), the Tribunal clearly held that the transaction value of a second hand offset printing machine cannot be discarded in the absence of any evidence produced by the Revenue poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neer s certificate produced by the importers themselves and then proceed to allow depreciation as admissible under the rules. It is in these circumstances that the original authority has rejected the transaction value under Rule 4 of the CVR and proceeded to determine the residual value under Rule 8 of the CVR after proceeding sequentially through Rules 5 to 7. Rules 5 to 7 7A, in this case are rendered inapplicable, inasmuch as in the case of second hand machinery, no one to one comparison can be made with regard to its identical nature or similar nature and no data in that regard has also been produced by the importers. Therefore, the original authority has proceeded to determine the price under rule 8 of the CVR. 10. The learned Member (J) has held that the judgment of the Hon ble Supreme Court in the case of Gajra Bevel Gears v. CC, Bombay reported in 2000 (115) E.L.T. 612 (S.C.) is distinguishable as in that case the Apex Court was examining the case of a car on which the auction price was not accepted but valuation was made by ascertaining the price of the new car and then allowing the depreciation. I observe that in that case while dismissing the appeal of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determining the valuation of imported goods. The Revenue has submitted that valuation of second hand machinery is hit by the exception in Rule 4(2)(b)(ii) which states that the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of goods being valued . The Revenue has contended that in the case of second hand machinery, the sale price is always subject to certain conditions/considerations because of its usage, upkeep, maintenance, thereby no comparison whatsoever is possible with other second hand machine not only under Rule 4 but also under Rules 6 to 7 7A of the CVR. I find considerable force in the plea of the Revenue. In view of the above, I am of the considered opinion that the case law cited by the Revenue in the case of Gajra Bevel Gears Ltd. (supra) is squarely applicable to the present case and the lower original authority has correctly rejected the transaction value and adopted the value under Rule 8 of the CVR and his order needs to be restored and the order in appeal is required to be set aside being unsustainable in law. Ordered accordingly. Sd/-(Jeet Ram Kait)Member (T)7-8-2002 POINT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the valuation of a second-hand machine under the depreciation method under Rule 8 ibid. The aggrieved party went in appeal to the Commissioner (Appeals) and the latter set aside the decision of the lower authority and accepted the value declared by the assessee as transaction value under Rule 4(1) ibid read with Section 14(1) of the Customs Act, 1962. The Commissioner (Appeals) relied on the decision of the Supreme Court in Eicher Tractors v. CC, Mumbai, 2000 (122) E.L.T. 321 (S.C.). Aggrieved by the decision of the Commissioner (Appeals), the Revenue has approached this Tribunal. 14. The matter has been exhaustively argued before me. Shri G. Sreekumar Menon, SDR for the appellant refers to Rules 4 to 10A of the CVR and submits that in terms of the procedure laid down under Rule 10A, ample opportunity had been given to the importer to prove the accuracy and truth of the declared value of the goods, that the Chartered Engineer s certificate produced by the assessee did not disclose any reason for the expert opinion that the value declared by the assessee appeared to be reasonable, that the certificate merely stated that the second-hand machinery in question had been specially de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of the Tribunal has been affirmed by the Apex Court in the judgment reported in 2000 (115) E.L.T. 612 (S.C.). According to ld. DR., the facts of the instant case are substantially similar to the facts of Gajra Bevel Gears v. CC, Bombay (supra) and therefore the ratio of the decision of the Supreme Court has to be squarely applied to this case. It is the further contention of the DR that the various decisions of the Tribunal relied on by the assessee and noted by the learned Members of the regular bench have got to be examined in the light of the ratio of the Apex Court s decision in Gajra Bevel Gears case. Before concluding his arguments, ld. DR has also supported the reasoning of the decision of the adjudicating authority with reference to Rule 4(1) of the CVR. He submits that, in respect of a second-hand machinery which is specially designed for working with a manufacturing plant designed on the Bosh technology, there could be no market data for comparison of the declared value and the question of one-to-one comparison of the goods with identical or similar goods did not arise. Ld. DR submits that, having regard to this indisputable position, this Tribunal categorically h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case on hand from Gajra Bevel Gears case on this basis. In support of the decision of the lower appellate authority as affirmed by learned Member (Judicial), ld. Counsel submits that there are numerous similar cases in which this Tribunal has consistently taken the view that, in respect of even second-hand machinery, it is imperative for the assessing authority to reject the declared value of the goods on valid grounds under Rule 4(1) before resorting sequentially to the later rules of the CVR. He has cited the following decisions of this Bench :- (1) Rugmini Ram Raghav Spinners Pvt. Ltd. v. CC, Hyderabad - 1998 (103) E.L.T. 366 (T) (2) Essar Graphics (P) Ltd. v CC, Chennai - 1999 (107) E.L.T. 94 (T) (3) Sree Rajendra Mills Ltd. v CC, Madras - 1997 (90) E.L.T. 68 (T) (4) Medax Rubber Ltd. v. CC, Chennai - 2000 (117) E.L.T. 700 (T) In the above cases, the declared values of imported second-hand machinery were accepted. The ld. Counsel, further, submits that the adjudicating authority has partly relied on the Chartered Engineer s certificate and partly rejected it in the matter of valuation of the goods in question. For the purpose of original value of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order to exclude the provisions of Rule 4(1) from consideration. In the instant case, ld. Counsel submits, the adjudicating authority has found under clause (b) of sub-rule (2) of Rule 4 that some condition or consideration existed, which allegedly warranted rejection of the declared value under Rule 4(1). Counsel submits that the condition and consideration referred to under clause (b) of sub-rule (2) of Rule 4 were misconceived by the adjudicating authority. He submits that the condition consideration contemplated under clause (b) are factors of monetary value. No such factor has been found by the adjudicating authority. Ld. Counsel therefore, submits that the reliance placed by the adjudicating authority on Rule 4(2)(b) for rejecting the declared value is misplaced. None of the exceptional or extraordinary circumstances as particularised under Rule 4(2) was found to have existed in the instant case and therefore the rejection of the declared value under Rule 4(1) was illegal. Ld. Counsel, therefore, urges that the order of the Commissioner (Appeals) be affirmed. 16. I have applied my mind to the facts of the case as also the submissions made before me. I have also gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated 26-9-1991 against which the goods have been supplied. This import licence is for importing machines of 1984 make and therefore, this invoice shall give the price only of machines which are of 1984 make . Since the second hand machines imported by the appellants were of 1986 make we therefore, hold that value indicated in the invoice was not acceptable and rightly so. The importer himself supplied Chartered Engineer s Certificate indicating that the value of the machines when manufactured was DM 80,000/-. This price has been indicated against entry VI in the Chartered Engineer certificate. 22. We also note that the machines were second hand reconditioned and therefore the question of finding identical contemporaneous imports did not arise. We also note that the manufacturer s price of the machine was not produced by the appellants. In view of the above case law on the subject, we hold that the learned Collector was perfectly right in allowing depreciation from the manufacturer s price of a machine given by the Chartered Engineer in the peculiar circumstances of the case. Further, we also find that the learned Collector has allowed depreciation of 58% though the machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of customs duty and such instructions are binding on the assessing authority. The circular relied on by the lower appellate authority as also by the ld. DR today contains Board s instructions issued under Section 151A. The executive instructions issued by the Board under Section 151A has statutory force and the same would cover an area in which the CVR is silent. According to my understanding, the Tribunal and the Apex Court in the case of Gajra Bevel Gears Ltd. have virtually given the stamp of approval to this proposition, by holding to the effect that, where second-hand machinery, in respect of which the question of contemporaneous imports of identical/similar goods would not arise, is imported, depreciation method of valuation would be an appropriate residual method under Rule 8 of the CVR that could be invoked to the exclusion of other rules. It is significant to note that neither the Tribunal nor the Apex Court has attempted to examine the need of considering the applicability of Rules 5 to 7A before taking recourse to the residual method under Rule 8. It appears to me that the ratio of the decision in Gajra Bevel Gears case is that, in respect of second-hand machinery, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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