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TMI Blog2021 (12) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... cheme of valuation. The methodology of customs authorities in United States of America for valuing leased goods in terms of rental charges will not be consistent with the assessment under Customs Act, 1962 as elaborated supra with proportionate attribution afforded by notification no. 27/2002-Cus dated 1st March 2002 amended by 27/2008 dated 1st March 2008. In the context of declared value not being the transaction value envisaged in Customs Act, 1962 and the replacement value , sought to be validated in the appeal of Revenue, not being in conformity with the Rules, an assessable value is necessary. The impugned order has adopted a base value to which additions have been made and, in the process, utilized a notional price in the agreement that is neither price paid nor price payable which is a necessary qualification for transaction value of imported goods , identical goods or similar goods in rule 3, 4 and 5 of Customs Valuation (Determination of Value of Imported Goods Rules), 2007. Likewise rule 7 and 8 of the said Rules specify the circumstances that validate appraisal. Extended period of limitation - HELD THAT:- The show cause notice, issued on 4th November ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J MATHEW, MEMBER (TECHNICAL) AND MR AJAY SHARMA, MEMBER (JUDICIAL) Shri Ramnath Prabhu, Advocate for the assessee-appellant Shri Manoj Das, Assistant Commissioner (AR) for the respondent ORDER Considering the factual matrix of the dispute leading to order-in-original no. CC/MAK/18/2011-12 ADJ ACC(I) dated 26 th December 2011 of Commissioner of Customs (Import), Air Cargo Complex, Mumbai impugned before us by M/s Futura Travels Ltd as well as by Revenue, the issue to be determined is the valuation to be adopted on aircraft engine expressly imported for a limited period and for stop gap fitment during the overhaul of the regular engines by the provider of the imported replacement. It is common ground that the duty levied on the engine at the time of import is receivable, again of an undisputed proportion, by M/s Futura Travels Ltd as drawback permissible under section 74 of Customs Act, 1962. There is also no dispute that the terms of the agreement with the supplier of the replacement engine provides for security deposit as a prerequisite for sending it to M/s Futura Travels Ltd and that US$ 147 per flying hour was chargeable during its deployment on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 1st March 2008) when its valuation at the time of import was taken up for investigation leading to the show cause notice that was disposed off vide impugned order which is now before us. 4. The notice proposed rejection of the value of US$ 25,000, declared on the basis of commercial invoice no. S/22609/01.08.2009 pursuant to agreement no. R-1035/09 dated 8th July 2009 as it pertained to refundable security deposit and the lease agreement provided for payment of US$ 909,563 should the engine be destroyed, lost in transit or otherwise not returned to the supplier. During the course of investigations, the supplier did, at the instance of the importer, intimate US $ 370,000 as indicative value of such engine with 6000 flying hours as time between overhaul (TBO) and that, if the option to purchase the engine on as is where is condition was exercised, payment of US$ 125,500/- would have to be effected. The adjudicating authority rejected the declared value and adopted the purchase option price to which freight (US$ 2965), insurance (1.125%) and landing charges (1%) was applied before adding the rental invoiced at US $ 18,727.80 and US $ 24,255.00 for revising the value to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at US $ 25,000 is only a security deposit pursuant to condition for providing the replacement engine and to be returned upon fulfilling of the service agreement. He submits that as this could, by no stretch, be assessable value, the only alternative value in the lease agreement must necessarily be adopted. He contends that the other values, including the purchase option price adopted in the impugned order, were not contemplated in the agreement and, as subsequent clarification, lacked reliability and validity. Drawing upon the base price of US$ 125,000, the repair value declared on re-entry of the original engines and the value declared for dispatch, Learned Authorized Representative attempted to demonstrate the approximation to the value incorporated in the agreement pertaining to deployment of replacement engine. It was, therefore, contended that not only was the declaration on entry of the replacement engine incorrect but that the adoption of the lesser value in the impugned order was also not in conformity with the law. 8. That the replacement engine was not imported for permanent deployment in India is not in dispute. Doubtlessly, it is the usage for a time that is of comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf: Provided further xxxx Provided also xxxxx (ii) the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case; xxx Explanation. -For the purposes of this section-' of Customs Act, 1962 in the context of the contractual engagement between the importer and the overseas entity, the claim preferred on behalf of the appellant that US$ 25,000, paid against invoice raised towards security deposit provided for in the agreement, is the sole consideration for procurement and is the transaction value contemplated for assessment does not find favour with us. Such transaction value intended to be accepted without question must pertain to sale which the impugned transaction is not. Therefore, in any transaction of importation for a while, the commercial terms of payment are not transaction value for assessment. Assessable value will have to be determined in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is a necessary qualification for transaction value of imported goods , identical goods or similar goods in rule 3, 4 and 5 of Customs Valuation (Determination of Value of Imported Goods Rules), 2007. Likewise rule 7 and 8 of the said Rules specify the circumstances that validate appraisal. Thereafter, the only option that remains is 9. Residual Method. (1) Subject to the provisions of rule 3, where the value of imported goods cannot be determined under the provisions of any of the preceding rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and on the basis of data available in India; . and in terms of which the combination referred above cannot, by any stretch, claim to be consistent with the principles and general provisions of the said Rules. Furthermore, the additions include payment related to use in India which lacks sanctity except under the circumstances enumerated in rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Most importantly, value computed in accordance with residual method must necessarily be on the basis of data availa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d period on lease was not suppressed from customs authorities at the time of import and the invoice submitted along with the bill of entry made this abundantly clear. Furthermore, it was only at the time of export of the leased engine that customs authorities nudged themselves awake even though the two engines of the aircraft had been entered for export and import on separate occasions and assessment of the imports on repair value would have been permitted, and indeed tolerated, only upon production of the said agreement which incorporated the provision for temporary allocation of the impugned engine. The adjudicating authority has ignored these vital facts in deciding upon the validity of the demand traversing beyond the normal period of limitation. 15. Delegation of that statutory responsibility upwards will only encourage irresponsible adjudication. As appellate authority, it devolves upon the Tribunal to enforce respect for the law and the restrictions that the law places upon executive authority. Such evaluated decision making is not a luxury appropriated by magnanimous appellate authorities but is the obligation to be internalized by adjudicating authorities without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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