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TMI Blog2023 (9) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... ne and the value enhanced was accepted for release of the goods by the appellant themselves. The duty and interest therefore have been correctly paid. Mis-description - confiscation - penalty - HELD THAT:- The goods even as per the party were used only to some extent, stated to be in some trial runs. The examination reports relied upon by the department, atleast some of them do mention possibility of such use. The authorities below have ousted the description of the party as given in the bill of entry on the ground that use in trial run cannot be equated with commercial use - the goods were not liable for confiscation on account of description, and also the valuation since same depended upon usage, which was arrived only through various expert opinions. And the party having willingly accepted the value once the condition and extent of usage became known to them cannot be subjected to penalty - the goods are not liable for confiscation in the specific facts of the case and penalty imposed cannot be sustained. The post importation conduct of the party of voluntarily accepting enhanced value, when extent of usage became known to them, while not imposing any penalty or upholdin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined on 15.9.2016 under supervision of AC(Docks), cargo is a machine labeled as ARBURG Model 520-S-1600-400 Make-2014. The machine was apparently never used, as can be inferred from general visualization of the threading of the holes and/or greasing on exposed parts of machine. Therefore, in my considered opinion the machine may be old but not a used one and even if for the sake of argument it is presumed that the machine is used one, then it might had been used under trial run and as such not for commercial production. Another member, Superintendent (Docks) in his report observed that on examination of the machinery, it was found as new and unused. However, it appeared that it was run for some trials. (emphasis supplied) 1.5 The goods were examined by Shri Mihir T Mistry, Government Registered Value, who vide letter dated 2.9.2016 had observed that: I observe that the aforesaid imported machine is unused and new it was used only on trial run. I therefore, submit my detailed examination report in prescribed Form B which is as under: (emphasis supplied) Observation of CE: Based on wear-tear, technology and status of machine, the estimated CIF value of this ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2014 vintage. On being specifically asked as to whether the same was re exported as declared at the time of importation, a response was given in negative mentioning that the same was due to own litigation. 2.1 It was further submitted that under the Customs Act, the value has to be transaction value. The transaction value in this case is available. There is no averment in the notice that the transaction value is affected by any of the factors. It is settled law that the department must first reject the transaction value and only thereafter, the other methods of valuation can be followed. In the present case, there appears to be no reason for rejecting the transaction value. The notice does not show why the transaction value is not correct. Merely saying that the machine appears to have not been used, and therefore, may have higher value, is not sufficient basis for rejecting the transaction value. Unless and until the transaction value is rejected, no further enquiry can be entered into. Clearly, therefore, the very basis of the notice does not survive. 2.2 Appellant relied upon Tribunal decision in the case of DIVINE INTERNATIONAL 2016 (338) ELT 142 (Tri. Del.). Even othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machine. The value is sought to be enhanced on the ground that the machine is new / unused and hence has higher value. Thus short point involved in this matter is to decide whether the imported injection molding machine is used or unused. This is pure question of fact. The matter can be decided obviously, only by examination of the imported machine. 2.8 However, it is on record that there is one expert (Manish T Mistry) who had given two separate contrary opinions on the very same day of inspection, there are two expert opinion obtained by the department, at our back, stating that the machine is unused and there is an opinion by another expert with photographic evidences to show that the machine is used. The Superintendent in cross-examination has also indicated that the machine was used though may be for trial purpose. 2.9 Further the machine had in-built counter to show number of moldings undertaken. This counter will be functional if power is connected to the machine. This would conclusively establish the use of the machine. 2.10 Subject to our above request, appellant make following submission. The department appears to have called technical expert Shri Manish T Mis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination carried out by the officers and noted in para 2 of the show cause notice. The Docks Examination Officers have clearly examined the goods which would not have been possible if the machine was fully packed as claimed by the Chartered Engineer in his second report. These two facts clearly contradict. The Docks Examination Officer would have occasion to call for expert opinion only if prima facie doubt arose. Without examination, the Docks Examination Officers would not have called for expert opinion. Thus, the probability is more that the first opinion of the Chartered Engineer is correct whereas the second opinion was made under pressure from the department clearly because it was contradictory to officers desire to declare the machine to be unused. 2.13 It is also noteworthy that neither during examination by the Docks Examination Officer nor by the expert, the CHA or the importer was present. There appears to be no reason to conduct such examination at the back of CHA / importer. The reference to documents in the opinion is to the documents filed with customs for assessment. No documents were given to the Mr Mistry. 2.14 What is more surprising is though the second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -exported could not actually be subjected to re-export till date. 2.19 During the course of hearing, the Advocate further pointed out the Circular No. 25/2015-Cus dated 15.10.2015, can have applicability in their case, only if machinery is old and used. Therefore the department is seeking to apply the circular they are by implication agreeing with the product description and also to the fact that goods were old and used and were second hand machinery. Therefore, as per para 3 of the board circular, the goods are required to be assessed as per the price paid or payable which is already available as per their invoice. Therefore department has clearly erred in treating the goods to be as per their description, albeit by implication, on one hand and still not accepting the value as indicated by them. He also places reliance in the matter of M/s. Champion Photostat as reported in 2021 (376) ELT 394 (Tri-Del), that the enhancement of value and rejection of transaction value cannot be done on the basis of Chartered Engineer s certificate. 3. As against this Learned AR relies upon the following findings of the Commissioner (Appeals) to justify the rejection of the appeal and pleaded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that during the inspection, I could not inspect the aforesaid machine as it was covered by hard wooden box lying inside the container which was got opened slightly from one corner. So I relied upon the documents so produced before me by the Customs broker. Now on being called by the Superintendent (DE) and DC(DE) for proper inspection of the said 13 goods on the same day i.e.2.9.2016, I have carefully and thoroughly examined the said machine removing wooden box from the front side in such a way that it could be examined properly. After thorough examination, in the presence of the above said officers of Customs (DE) and Customs broker representative, I observe that the aforesaid imported machine is unused and new and it was used only on trial run. I therefore, submit my detailed examination report in prescribed Form B which is as under and my earlier issued certificate as mentioned above may please be treated as CANCEL. (emphasis supplied) The relevant portion of his examination report is as follows: (vii) If no, please estimate the original sale price of capital goods: 1,30,000 USD (Approximate) (viii) Present condition of second hand machinery capital go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... committee examined the impugned goods and Shri NJ Lilwani vide his report dated 16.9.2016 confirmed that machine's YOM is March 2014. The Main frame, Moving parts/Ram, all hoses with their fittings, gauges, electrical panel, electronic display, gas cylinder, foundation, are found new an unused and no part of machine is Wounded Mould/die holding holes are in perfect condition. No scratches on painting or any part of machine. Considering the status of moving parts, non-moving parts, hoses, fittings. paintings and accessories the machine has apparently not been used. Thus in my considered opinion machine is old but unused. Based on YOM, the present international market value may be USD 1,35,000. 3.5 Shri Anwar Y Kukkad vide his report dated 16.9.2016 confirmed that machine is in good condition as unused and new, balance life span is more than 15 years subject to suitable installation and maintenance. The estimated value of identical machine in international market may be USD 1,30,000/-. The estimated yalue of new machine of this nature may be USD 1,45,000/ The adjudicating authority has correctly further observed at para 17 of the impugned order that as per the above reports, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not find infirmity in the impugned order and no interference is called for in the order passed by the adjudicating authority. 3.7 The appellant contended that plastic moulding machine requires mold of the product to be molded in the machine; Mold area gives clinching evidence as to machine being used or puuted, Shri Lalwani stated it was difficult to recollect whether mold was fitted and Shri Kukad stated there was marking of mold; Different answers by the CE shows suspicious as to correctness and veracity of their opinion. I find that the adjudicating authority has correctly observed in para 19 of the impugned order that during the cross examination, in answer to the question Do you recollect that any indication whether the mould has been ever fixed or not? Shri Lalwani replied that The moulding area was found in good condition, appearing to be unused whereas Shri Kukkad replied may be for trial , whereas adjudicating authority has correctly opined that these replies supports each other and inspires a confidence that the machine, before import might had undergone some trial runs and as such not for commercial productions. I do not find infirmity in the impugned order and n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of confiscation or differential duty, interest and penalty does not arise. I find that the adjudicating authority has correctly observed in para 24 of the impugned order that when the department has issued show cause notice for rejection of the transaction value of USD 98,500/- and has demanded customs duty and such duty has been paid by the appellant, it is clear that the declared transaction value has not been accepted by the department. The case law cited by the appellant reads as the transaction value has to be accepted as the correct assessable value unless contrary evidence is available to show that the payments made by the importer to the exporter stand influenced by the other compelling circumstances. In my considered opinion there are sufficient evidence on record evidencing that the invoice value of USD 98,500 is not sufficient and thus liable to be rejected and thereby the same is re-determined at USD 1,30,000. I find that the goods have been consigned by Milacron, USA, a related person to the appellant, therefore, the invoice value cannot be accepted as transaction value. Further, the adjudicating authority has observed in para 25 of the impugned order that the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods are rendered liable for confiscation by the importer, it becomes imperative upon the appellant to pay of the differential duties of Rs.5,64,012/- and once the demand of duty is justified, it is imperative that the importers are also liable to pay interest at appropriate rate under Section 28 of the Customs Act, 1962, on the unpaid amount of duty. In view of the above, I do not find infirmity in the impugned order and no interference is called for in the order passed by the adjudicating authority. It was thus the submission of AR that elaborate findings as above are correct and deserves to be upheld. 4. Considered. The matter pertains to injection moulding machine, which was described old and used by the party, and it was meant to be re- exported. However, the same it appears from the records and as confirmed by Advocate was never re-exported. During the course of investigation, party with consent had accepted enhanced value and discharged the duty, which was arrived at through the experts and by a Constituted Committee. Having accepted the enhanced value and paid duty on the same and not having re-exported the goods as was ascertained from the Advocate during the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld the description given by the party as used , as inappropriate by the department does not meet out approval. We are already agreeing with enhanced value as indicated by the department and which was accepted by the party. The supervening conduct of the party in not re-exporting the machine despite importing the same in India at enhanced value, within 6 months as was indicated in the bill of entry is conduct which supports the notion that given the condition of machine, the appellant had rightly accepted the value as was enhanced by the department. And rest of the contest is an afterthought. (2) Further on the part of the department, we find that Board Circular No. 25/2015-Cus dated 15 October, 2015 has been pressed into use for the valuation purposes, we find that this circular itself is applicable to the imports of second hand machine. Therefore, the department having pressed the circular into use cannot now revert back to say that, the goods were not old and used as the circular itself pertains to second hand machinery. 4.1 In view of the foregoing, we find that the goods were not liable for confiscation on account of description, and also the valuation since same depende ..... 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