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TMI Blog2010 (12) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... The major difference between the reports of two Chartered Engineers was that M/s. Best Mulyankan Consultants Ltd., Mumbai could not reconfirm the model numbers - On comparison of the two Reports it thus appeared to emerge that the Report issued by M/s. Superintendence Company ofIndia(Pvt.) Ltd., Chennai was more specific in that the model numbers had been categorically identified with the help of a technical expert - The value assessed by M/s. Superintendence & Co., which was close to the evidence collected by the department for the full used second hand machine therefore appeared to be correct and reasonable Regarding misdeclaration - Honrable Supreme Court in the case of Collector of Customs, Calcutta Vs. Sanjay Chandiram 1995 (77) ELT 241 (SC) which held that Rule 3 of the Customs Valuation Rules, 1988 providing for acceptance of transaction value is not a rule of invariable application regardless of the circumstances - In cases of misdeclaration the irresistible conclusion would be that if the real value of the imported goods has not been shown in the invoices, then the declared value cannot be taken as the transaction value - Accordingly the appeal is dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... House took up the documents filed by the appellants and it was also ordered that the detailed examination of the goods should be done in their presence along with independent Chartered Engineers. 3.The appellants state that accordingly, the imported goods were examined in detail by the officers of customs on 5.6.2003 in the presence of SIIB and also M/s. Superintendence Company of India Ltd., Chennai. During examination, it was found that the goods imported mainly consists of 43 Nos. old and used sub assemblies of photocopiers. It was also indicated that these machines are of Canon make. The Chartered Engineers subsequent to the inspection issued a report dated 13.6.2003 indicating that the items under reference are fairly complete photocopiers with few external parts missing. It was also certified that these machines have a residual life of minimum 10 years. The price appraised by M/s. Superintendence Company of India Ltd. for the above consignment indicated by these engineers as US$ 30425 (FOB). 4.The appellants through their letter dated 19.6.2003 submitted to the original lower authority that they do not agree with the findings of the Chartered Engineer and their valuation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther proposes confiscation of the subject goods and imposition of penalty on the appellants in terms of the various provisions of Customs Act, 1962. 3.The appellants had declared value of the goods as US$ 4515 (C F), M/s. Superintendence Company India Ltd. appraised value as US$ 30425 (FOB), M/s. Best Mulyankan Consultants Ltd. valued the consignment at US$ 15050 (C F) and the impugned show-cause notice proposed the value at US$ 27759 (CIF). 4.The original authority has passed a detailed adjudication order of 26 pages valuing the goods at US$ 25919.35 (CIF) (Rs.12,31,169/-), has confiscated the impugned goods declared as 43 nos. of heavy duty mainframe assemblies holding the same to be incomplete photocopiers having the essential character of complete photocopiers and classifying the same under Customs Tariff Heading 9009 12 00. He has allowed redemption of the impugned goods on payment of redemption fine of Rs.2.40 lakhs and has also imposed a penalty of Rs.1.20 lakhs. The original authority has reached a finding that since the impugned old/used photocopiers are restricted items and the same have been imported without a specific import licence, they were liable for confiscatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one by M/s. Best Mulyankan Consultants Limited at the cost of the petitioners. 4.With the above directions, these writ petitions are disposed of. 7.From the aforecited order of the Honrable Madras High Court, we find that the appellants were only directed to get a report from M/s. Best Mulyankan Consultants Ltd., Mumbai and to submit the same within a week of the Honrable High Courts order to the customs authorities. The Honrable High Courts order nowhere binds the customs authorities to accept the report obtained from M/s. Best Mulyankan Consultants Ltd., Mumbai. On the other hand, the customs authorities were given the liberty to issue a show-cause notice and proceed further in accordance with law. Under the circumstances, the original authority cannot be faulted in comparing the reports obtained by the appellants from M/s. Best Mulyankan Consultants Ltd. and the earlier report of the Chartered Engineers, M/s. Superintendence Company of India Ltd. Nor can the original authority be faulted for discarding the report of M/s. Best Mulyankan Consultants Ltd. and accepting the report of the Chartered Engineers, M/s. Superintendence Company of India Ltd. specially when he has record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of the packing, there could be severe damages to the components of the sub assemblies. 13.3Against para 33 of the said Report it was stated that unless the various components are fully tested and are installed, residual life estimation as a sub-assembly can not be considered. In the same paragraph it was concluded that we can comfortably say that the residual life can not be less than five years if properly tested and used. The conclusion drawn appeared to be contradictory to the contents of the same paragraph. 13.4 Against para 38 of the said Report, it was stated that many components are required to be installed on these subassemblies to make the machines complete. This observations implies that the sub-assemblies are not the complete photocopies machine. Against Para 39, it was stated that some printed circuit boards, moulded plastic panels, control panels, some motors, top glass of Teflon and sorters are not available, and that these were required to be mounted to make the machines complete. Against Pam 41, it was slated that non of the mainframes as they are today can be said to be complete machine or a fairly complete machine. However, against Para 42, it was stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he model numbers. Nevertheless, the model numbers appeared to have been identified by M/s. Superintendence Company ofIndia(Pvt.) Ltd., Chennai with the help of a technical expert. In view of the various deficiencies and inconsistencies that were apparently found in the Report issued by M/s. Best Mulyankan Consultants Ltd. Mumbai, it appeared that the certificate issued by M/s. Superintendence Company of India (Pvt.) Ltd., Chennai was more akin to the actual condition of the goods and complete in comparison with the certificate issued by M/s. Best Mulyankan Consultants (Pvt.) Ltd., Mumbai. 15.From the investigation conducted it appeared that the 43 Nos. of items declared as Mainframe Assemblies appeared to contain all sub-assemblies/assemblies and components of complete photocopiers except certain parts like control panels, plastic covers, some printed circuit boards etc. Classification of goods in the First Schedule Import Tariff of the Customs Tariff Act. 1975 is governed by the General Rules for the Interpretation of the said First Schedule, any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished provided that, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yankan Consultants Pvt., Ltd., Mumbai that valuation of the goods appeared to have been done in a very generalistic way without even ascertaining the model numbers. The observation made in Para 41 of the report that none of the mainframes as they are today can be said to be complete machine or fairly complete machine appeared to be totally in contradiction to the observations made in para 42 that a duly trained technician is required to test all the sub-assemblies, understand the limitation of the use of the said sub-assemblies etc. before the machines can be put to the operation. It appeared that nobody would sell old and used machinery after systematically dismantling the same parts in all the machines. Once the machine became useless, the machine would have been sold only as such. In this case, specific parts were found to have been dismantled which did not appear to be a mere coincidence. 19.Against para 28 of the report issued by M/s. Best Mulyankan Pvt. Ltd., Mumbai it was stated that only after the mainframes, subassemblies were made operational, the real utility value could be arrived at. The model numbers had also not been identified. Under these circumstances, it was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32445/- # 475 Rs.3554/- --- --- 3. NP 6050 US$ 525 Rs.24333/- --- --- --- 21.It appeared from the above table that the value assessed by M/s. Superintendence Co., was in close comparison to the value evidence recovered by DGCEI. The value assessed by M/s. Superintendence Co., which was close to the evidence collected by the department for the full used second hand machine therefore appeared to be correct and reasonable. In light of these facts, it also appeared that the opinion given by M/s. Best Mulyankan Consultants Ltd., Mumbai with due respect to them, could not be taken into consideration since the value appeared to have been assessed without knowing the model numbers of the machines, without knowing whether they were in working condition or not and without knowing whether they were damaged or not. The value assessed by M/s. Superintendence CompanyIndia(Pvt.) Ltd., Chennai, appeared to be more reasonable and prima facie appeared to be acceptable since the same appeared to have been given taking into consideration all the above factors. 22.The facts and circumstances of the case appeared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on the ground of misdeclaration is justified even without reference to the valuation aspect. Further, even the value determined by M/s. Best Mulyankan Consultants Ltd., which is US $ 15050 (C F) compared to the value of US $ 4515 (C F) declared by the appellants, establishes the charge of undervaluation against the appellants and justifies confiscation on that ground. Consequently, the imposition of redemption fine and penalty are also justified. Considering the fact that the value of the impugned goods has been determined as Rs.12,31,169/-, the redemption fine of Rs.2.40 lakhs and penalty of Rs.1.20 lakhs at approximately 20% and 10% of the assessed value cannot be considered excessive. We further find that though the Chartered Engineers, M/s. Superintendence Company of India Ltd. had indicated a value of US $ 27759 (CIF) for the impugned goods, the original authority has very fairly determined a lower value of US $ 25919.35 (CIF) in favour of the appellants by extending the benefit of doubt in their favour and reducing the value by 6.8% as an abatement towards the missing components as similar abatement was allowed in the case of another importer namely M/s. City Electronics, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the imported goods, had held that:- It has to be kept in mind that once the nature of goods has been misdeclared, the value declared on the imported goods becomes unacceptable. It does not in any way affect the legal position that the burden is on the Customs Authorities to establish the case of misdeclaration of goods or valuation or that the declared price did not reflect the true transaction value. 17.Similarly, in Collector of Customs,Calcuttav. Sanjay Chandiram (1995) 4 SCC 222 = 1995 (77) ELT 241 (SC), a three judge bench of this Court observed that:- These rules are based on the assumption that the price actually paid or payable for the goods has been genuinely disclosed by the importer. But, if the certificates of origin of the goods have been found to be false, the value declared in the invoices cannot be accepted as genuine. In the light of the Honrable Supreme Courts decisions cited above in paragraphs 11 and in this paragraph, and having regard to the factual scenario emerging from the records of this case, we are of the view that the case laws cited by the learned advocate do not apply to the facts of the present case. 13.In view of the foregoing, we uphol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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