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TMI Blog2013 (3) TMI 597X X X X Extracts X X X X X X X X Extracts X X X X ..... with inspection certificate issued by C. Choudhary, Chief Engineer, England dated 7-11-2003, forwarded by the overseas supplier. As per the said certificate of the Chief Engineer the visual inspection and test short were carried to identify the machine and to see the actual condition. He accordingly observed that parameters of the machines are within the accuracy range of such type of machines. He also wrote that the original price of the machine in the year of manufacture was Euro 2000. 3. The machines were examined by the customs on first check basis wherein they found that some parts of the machine were very old and motor installed in one part of the machine was marked as 1981 manufactured. It was also observed that a new plate is fixed on one of the machines so that to give a look of not more than being 10 years old. Accordingly the Revenue engaged a local Chief Engineer to examine the consignment. He opined in respect of all the three machines on their age as also on the value. The salient points of reports are as under : "(a) One used horizontal boring machine of make union BFT100/IV is more than 10 years old. (b) One used jig-borin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the same is being enhanced. Surprisingly the adjudicating authority has also not arrived at the correct value inasmuch as no quantification of the same stands done by him. He has simply directed the appellant to pay duty on the enhanced value. What is the enhanced value, the Joint Commissioner is silent about. 6. On an appeal filed against the above order, Commissioner (Appeals) rejected the same by solely relying upon the committee of experts constituted by the Revenue and by rejecting the Chief Engineer's certificate produced by the foreign supplier. He has observed that the Chief Engineer has not referred to any technical literature of the machines or catalogue or manufacturer's invoices/price list or any supporting documents to arrive at his opinion and has not mentioned any basis for recording his observation. Accordingly he observed that credibility of such baled report of a Chief Engineer located in England for machines exported from Germany is doubtful. He accordingly accepted the visual examination's report by the Customs as also by the committee of experts. The said order is impugned before us. 7. The appellants have strongly contended that the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner (Appeals) at all. We accordingly find no reasons for payment of duty on the enhanced value, which does not stand specified by the lower authorities. In any case there being no rebuttal to the invoice price, the payment of duty on the invoice price is upheld. 11. In view of our foregoing discussions, the impugned orders are set aside and appeal is allowed with consequential relief to the appellant. (Pronounced in Court on__________) Sd/- (Archana Wadhwa) Member (Judicial) 12. [Per : B.S.V. Murthy, Member (T)]. - I have gone through the order proposed by the learned Member (Judicial) and since I am not able to agree with the conclusions, I record a separate order. 13. The appellant imported three old and used machines namely horizontal boring machines of make i.e. UNION, BFT 100/IV, one Jig Boring machine make MIKO/ROMAT Bkok. 600 x 1000 and one horizontal boring machine of make UNION, BFT 125/III. The machines were declared as less than ten years old. On examination, the machines were considered to be more than 15 to 20 years old and during the relevant time, the import of such machines was not permitted without a licence under Exim policy 2002-2007. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted for personal hearing before deciding the issue. Shri Sujan representing the CHA appeared for personal hearing on 9-2-2004. Thereafter the original adjudicating authority recorded the following as in findings. "Findings : I have gone through the records of the case. The case is based on physical examination by Customs and expert and there is nothing to argue about. I am convinced that the whole set of machine has been undervalued by the importer. It is evident that the importer have tried to mislead by distorting the year of manufacture. I, also, based on physical examination of machinery observe that the machinery's years of manufacture are 1979/81 that is the machinery is older to 10 years and requires import licences. Therefore, all the machinery is liable to confiscation under Section 111(d), (f) & (m) of the Customs Act, 1962 and the importers to penalty under Section 112 ibid. ORDER All the machineries are hereby confiscated with option to redeem the same after payment of fine of Rs. 1,50,000/- (Rupees One Lakh Fifty Thousand Only) under Section 125 of the Customs Act, 1962 in addition to duty, whatever it may be, on enhanced value. I also impose penalty of Rs. 1,50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chine manufactured in 1994 if it comes up for repair which would be definitely after 1994. Even now no explanation is available for this discrepancy. Further, there is no explanation from the appellant why one of the machines had a new plate showing the year of manufacture as 1994. This finding has not been contested also. The only ground taken by the appellant before the Commissioner (Appeals) is that before enhancing the value, the procedure required as per Valuation Rules should had not been followed. In this case in view of the fact that appellant waived the issue of show cause notice and even in the absence of an order specifically mentioning the assessable value, assessable value was enhanced to Rs. 16 lakhs would show that the value was arrived at on the basis of mutual consent. It has to be noted that amendments in the bill of entry were made by the CHA and no claim has been made that these amendments were forcibly made by someone else. The amendments in the bill of entry were made after the order was passed. In fact in the bill of entry there is an endorsement "assessable value enhanced as per the order dated 24-2-2004." Further contrary to the claim of the appellant that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er's opinion submitted by the importer as held by learned Member (Judicial) or it has been correctly rejected as held by Member (Technical)? 19. Whether the original value of the machines indicated by the Chartered Engineer in EURO renders the opinion suspect as held by Member (Technical) or the report has to be accepted as a valid one as held by learned Member (Judicial)? 20. The confiscation of the machines is to be set aside as held by learned Member (Judicial) or to be upheld as held by Member (Technical). 21. Penalty imposed has to be upheld as held by Member (Technical) or to be set aside as held by learned Member (Judicial). (Pronounced in Court on 9-11-2010) Sd/- (B.S.V. Murthy) Member (Technical) Sd/- (Archana Wadhwa) Member (Judicial) 22. [Per : M.V. Ravindran, Member (J)]. - This Difference of Opinion is listed before me as per orders of Hon'ble President for deciding the points of difference arose between the Bench while deciding the Appeal No. C/1019/2005. 23. Following Difference of Opinion are indicated :- (i) Whether the opinion of the expert committee appointed by the Revenue that two machines are older than ten years and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Khushiram Beharilal v. CCE - 1997 (94) E.L.T. 129 that mere waiver of show cause notice cannot be construed as acceptance of value. It is settled law laid down by Hon'ble Supreme Court in the following judgments that even in the case of second-hand goods, the transaction value cannot be rejected unless there is evidence to show that there is violation of any of the clause of the proviso to Rule 4(2) of the Customs Valuation Rules, 1988, justifying rejection of the transaction value : Tolin Rubbers Pvt. Ltd. v C.C.E - 2004 (163) E.L.T. 289 (S.C.) - Motor Industries Co. Ltd. v. CC - 2009 (244) E.L.T. 4 (S.C.). In the present case, there is not even a whisper in the impugned order of any evidence of violation of any of the clauses of the proviso to Rule 4(2). The only ground advanced in the impugned order is that on visual examination, it was opined that the value of the goods in the Indian market would be higher. This is not one of the grounds contained in the proviso to Rule 4(2) for rejecting the transaction value. In any event, there is no evidence of any market survey report relied upon in the impugned order. Even if it is to be assumed that the local market value is Rs. 30 la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Member (Technical) is that the Chartered Engineer has given the price in the year of manufacture of 1994 in terms of Euro whereas Euro was introduced in 1999. This reasoning ignores the fact that Euro merely replaced the former European Currency Unit (ECU) in ratio of 1:1. Since the Chartered Engineer has issued the certificate in 2004 by which time Euro was in existence, he has given the Euro equivalent of ECU which in any event was in the ratio of 1:1 to Euro. It is therefore submitted the view taken by ld. Member (Judicial) is correct in law and it is prayed that the same be agreed to. 25. Ld. Additional Commissioner (AR)'s submissions are as under :- Difference of Opinion at (i) : The import of second-hand machinery older than 10 years was restricted as per the provision of EXIM Policy 2002-2007. In the instant case, the importation of the second-hand machinery was accompanied with a Chartered Engineer's certificate, certifying that all the machines were less than 10 years old. However, the said certificate was liable to be discarded on account of following :- (a) In one of the machines, two of the most vital components viz. coolant pump driv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not have been imported without licence has to be upheld. In this regard, reliance is placed on the following decisions :- Michigan Tyres Ltd. v. C.C., Mumbai - 2002 (150) E.L.T. 420 (Tri.-Del.) Essar Steel Ltd. v. C.C., Ahmedabad - 2004 (166) E.L.T. 90 (Tri-Mum.) Difference of Opinion at (ii) : In view of the facts narrated above, it is apparent that there was misdeclaration in the age of the machineries with a view to illegally importing what, otherwise, was a restricted item. It may also please be seen that the Chartered Engineer had mentioned the original value of the machineries in EURO for a period when EURO was not in vogue. Hence, the value declared by the importer at the time of import cannot be taken as the true transaction value. In this regard, the reliance is placed on following decisions :- (a) CC, Tuticorin v. Rabbani Exports - 2011 (271) E.L.T. 533 (Tri-Che.), wherein in Para 6, it has been held as under : "After hearing both sides and perusal of the cited case law, we find that the impugned goods have been clearly misdeclared in the invoice as well as in the Bill of Entry. As such, the value indicated on the basis of such mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. (i) above, EURO was introduced as an accounting currency only on 1-1-1999 and EURO notes entered circulation only on 1-1-2002. In this regard, a small write-up, as downloaded from Wikipedia, is enclosed. Hence, the prices of machineries manufactured around 1994 could never have been mentioned in EURO. This, coupled with the fact of mis- declaration of age of the machineries, necessitates the discard of certificate produced by the importer, as a whole. Mentioning of price in EURO when EURO was not even conceived makes it clear that the certificate was a sham. The value certified vide this certificate can also not be taken to be true on account of mis-declaration, as submitted in Point No. (ii) above. Difference of Opinion at (v) : In view of the detailed submissions above, it is clear that there was a deliberate misdeclaration of description and value and a restricted commodity was sought to be illicitly imported, without processing a valid licence to import the same. Hence, the confiscation of machines is liable to be upheld as held by Hon'ble Member (Technical). Difference of Opinion at (vi) : In view of the detailed submissions above, the penalties imposed are justified an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty bound to follow the provisions of Customs Valuation Rules in its entirety. In my view, if the transaction value is sought to be rejected by the lower authorities, the enhancement or re-determination of the transaction value needs to be done in an appropriate manner as has been settled by various judicial forums. With respect, I may reproduce the ratio of the judgment in the case of Tolin Rubbers Pvt. Ltd. (supra), wherein their Lordships have held as under : "The appellant before us imported certain machinery under Bill of Entry dated 22-1-1996. The Assessing Authority held that the machinery in question has been used since 1968 and as per chartered engineer's certificate the machinery is found to have satisfactory useful residual life of at least 10 years and giving maximum depreciation of 70% held that certificate issued by the chartered engineer should be held to be correct and admissible, as the basis for the determination of value in terms of Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 1988 and determined the assessable value of the goods in question at Rs. 53,77,412/- in terms of Rule 8 of Customs Valuation Rules, 1988 issued under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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