Customs, Excise and Gold Tribunal - Tamil Nadu
Sree Rajendra Mills Ltd. vs Commissioner Of Customs on 9 August, 1996
Equivalent citations: 1997(90)ELT68(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. The issue in the appeals relates to the valuation of the machinery for purposes of Section 14 of the Customs Act, 1962 read with the Valuation Rules framed under the statute. The appellants in terms of the impugned orders have been held to have under valued the second hand items of machinery and a duty evasion for that reason has been held to be there under the impugned orders :
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SI. Appellants No. of Value Dept's Difference DutyDiff-
No. mach- Decla- Value in erence (Rs.)
ines red (Rs.) Value (Rs.)
(Rs.)
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1. RAJENDRA 4 51,13,008 81,71,452 30,58,444 11,46,917, MILLS S8/326/94 SIB 119/94 B/E/30418/ 217/94 Appeal No. C/321/94
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Sl. Appellants No. of Value Dept's Difference DutyDiff-
No. mach- Decla- Value in erence (Rs.)
ines red (Rs.) Value (Rs.)
(Rs)
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2. MEENAK- 3 38,34,535 61,28,622 22,94,087 8,60,283 SHISUN-
DARAM TEXTILES S8/327/94 SIB 118/94 B/E30416/ 217/94 Appeal No. C/322/94
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3. KUHARA- 1 12,78,352 20,42,970 7,64,618 2,86,770 VEL TEX-
TILES
S8/328/94
SIB 120/94
Appeal No.
C/323/94
Redemption Penalty Remarks
Fine Imposed Imposed
(Rs.) (Rs)
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1. 3 Lakhs 30,000
2. 2,29,000/- 20,000
3. 75,000/- 7,500
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The learned lower authority has not accepted the price of the goods as shown in the invoices for the goods and as declared by the appellants in the Bills of Entry and has proceeded to fix the value as per Section 14 of Customs Act, 1962 under Rule 8 of the Valuation Rules. The second hand items of machinery have been imported from South Korea and the learned lower authority has relied upon the information furnished by the manufacturers as to the price of the machinery in the year of manufacture and allowed a depreciation of 70% on that value. While arriving at the value for the purpose of Section 14 of Customs Act, 1962. There is no allegation that the appellants had made any extra remittance in respect of these items of machinery or that there were any malafides in the transaction or that the transaction was not in the normal course of international trade. The Department however had information that second hand machinery was being imported after grossly under valuing the goods.
2. It is seen from the record that the Customs authorities elicited information from the Common Managing Director of the importers in the three cases. He has stated that he had at the behest of the buying agents M/s. J.R. Industries at Bombay inspected the machines in South Korea and thereafter the price for importation was settled. The said Managing Director was shown the invoice of the manufacturers and he in this regard stated as under in the statement recorded under Section 108 of Customs Act, 1962 :
"I have inspected the 8 Nos. Schlaforost Brand second hand Autoconers imported by B.E. No, 30450, dated 21-9-1994 for M/s. Mumaravel Textiles Ltd. (one number). B.E. No. 30418, dated 21-7-1994 for M/s. Sree Rajendra Mills Ltd. (4 Nos.) and B.E. No. 30416, dated 21-7-1994 for Sree Meenakshi Sun-daram Textiles Ltd. (3 Nos.) at the factory where these machines were in working condition in Korea during April, 1994.
I have inspected these machines at the advice of J.R. Mehta of J.R. Industries, 212, J.K. Industrial Estate, 52 BHIRE Marg, Worli, Bombay 400025 who are the agents for us. Though the goods were lying in 2 different factories in Seoul, Korea, we were asked by J.R. Mehta who was with me during inspection to contact Mr. Kim of K.B.C. Metron for getting the proforma invoices to enable us to open the L/Cs. When I contacted Mr. K.B.C. Matron enables us to get the details from EST Fibres in 110 Hillside Avenue. Suite 203, Spring Field N.J. We have received the Order confirmation dated 27-4-1994 from EST Fibres Inc., World Trade Centre, Ratterdam. The original owners of the machines were not willing to raise a invoice and hence, we got the supply through KBC Matron, Korea. We don't know the relationship between KBC Matron and EST Fibres Inc. The Chartered Engineer's certificate were arranged by the suppliers and sent to us. All the 8 machines were Model Type GKW with 50 drums each the 1 machine B.E. No. 30450, dated 21-7-1994 is erroneously indicated as Type GKV instead of GKV. I am given to understand that for the purpose of assessing at the assessable value, the Deptt. will take into account the F.O.B . price of DM 3,30,000 per machine in the year of manufacture to give depreciation as per Departmental Rules and add freight, insurance and loading charges . This being the Department method of valuation and time being short, having any other evidence such as original invoice issued by M/s. Schloforst at the time of sale to the Korean company I have no objection for fixing the assessable value of individual machines at 20,42,874 for the 7 machines and 20,42,570 for one machine.".
The invoice for the goods was raised by M/s. EST Fibres Inc. Rotterdam, Netherlands. A Chartered Engineer's Certificate has also been produced by the suppliers. In the absence of production of the original invoice of the manufacturers when they sold the goods to South Korean buyers to justify the price declared, the same has been enhanced as above by the Ld. lower authority. It has been stated by the learned lower authority that the importers had agreed to this enhancement.
3. The learned Consultant for the appellants at the out set pleaded that a reading of the statement of the Managing Director shows that he had not agreed* for enhancement of the value and all he stated was that he was shown the quotation and because, of pressure of time factor the Department could arrive at the value. He has pleaded that since the machines were under detention the appellants left to the authorities to work out the value. He has pleaded that there is no admission from the appellants that they had indulged in any under valuation or the price charged from them on account of factors extraneous to the normal trade transaction. He has pleaded that the authorities in terms of Section 14 read with the valuation Rules under the statute have first to show that the appellants price did not reflect the transaction value under Rule 4 of the said rules and then alone they can proceed to fix the value under other rules and as a last resort under Rule 8. He pleaded that the appellants had come on record as to the modalities of the transaction. He pleaded that the transaction was arranged through a buying agent M/s. J.R. Industries, Bombay whose address and location and the correspondence with them was made known to the authorities. He has pleaded that at their behest the Managing Director went to Korea and inspected the machines and after doing so the price to be charged ' was negotiated through the said agent. The finance for machines was arranged through Sundaram Finance and the appellants had taken the machines under a lease agreement from them and the Bill of Entry has been filed in the name of M/s. Sundaram Finance with endorsement 'A/C the appellants. He has pleaded that the price arrived at was a negotiated price as reflected in documents and correspondences with the indenting agents. It has been urged that what has been imported are second hand machines and the price to be adopted is the price at which the machines or similar machines can be imported from that country. As it is price of even two different second hand machines cannot be compared and any price to be fixed has to be with reference to the condition of the machine. He has pleaded that in the foreign countries the [older] model machines are being replaced by newer models and the goods are sold at the prices which the goods can fetch for export to countries like India. He has pleaded that the learned lower authority has not cited any case of similar machines having been imported into India at a higher price which is acceptable under Section 14. He has pleaded that in regard to the value under Section 14 under the Customs Act following in agreement at the international level based on GATT Code necessary amendment was carried out in Customs Act, instructions were issued by the Ministry for implementation of the same for valuation purposes Para 6 of such instructions as contained in the A.P. DO No. 77/88 following is set out:
"Once the importer has produced all required information it is necessary for the customs administration to decide on the method of valuation to be adopted and to determine the value. Declared value cannot be rejected without due consideration. The value also cannot be loaded solely because it is lower than the previously accepted customs values. It is here the data base built up by the Customs will be of help in identifying possible cases of deliberate or fraudulent undervaluation. In this regard attention is invited to Rule 10 of the Valuation Rules regarding the right of the proper officer to satisfy himself as to the truth or accuracy or any statement, information documents or declaration presented for valuation purposes. This would empower the proper officer to cause necessary enquiries or investigations to be made in cases of suspected undervaluation or fraud. Such enquiries investigations may be conducted on a selective basis either before or after clearance of the goods. If the invoice value are not found acceptable as a result of such investigations, it may be necessary to issue an appealable order giving grounds for rejections. In this regard a copy of advisory opinion on burden of proof recently adopted by the Technical Committee on customs valuation is enclosed for guidance (Annexure II).".
He pleaded that no investigation has been done nor any evidence has been brought on record to show as to why the declared value is not acceptable. He has pleaded that just because the authorities has some general intelligence that there was under Valuation of second hand machinery is not reason enough to reject the invoice value which is the transaction value under Rule 4 of Valuation Rules as the price was arrived at in the normal course of international trade. He has pleaded unless there were a series of imports at higher price and there was a data base then alone the appellant's declared price could be called to question. Even as per the above instructions normally because there was an earlier import at a higher price is not reason enough for loading a lower price. He further referred us to para 8 of the instructions which is reproduced below for convenience of reference :
"The residual method under Rule 8 does not lay down any fixed criteria for valuation. A flexible application of Rules 4 to 7 and any other method consistent with Section 14 (1) of the Customs Act, 1962 would be appropriate in this case. However, care should be taken to avoid using any of the prohibited methods specified under Sub-rule (2). This is an area where complete data of previously determined customs values of goods of like kind and quality would be of use, even if, they are not strictly identical or similar goods. Valuation of second hand machinery and used motor vehicles may also have to be done under this method. The principles of depreciation laid down, from the value of new machines /vehicles under the existing instructions could be applied in such cases. However, before applying this method, all other methods under Rules 4 to 7 will have to be ruled out."
He has pleaded that under Rule 8 the prohibited methods as set out below cannot be applied:
"(2) No value shall be determined under the provisions of these rules on the basis of -
(i) the selling price in India of the goods produced in India;
(ii) a system which provides for the acceptance for customs purposes of the highest of the two alternative values;
(iii) the price of the goods on the domestic market of the country of exportation;
(iv) the price of the goods for the export to a country other than India;
(v) minimum customs values; or
(vi) arbitrary or fictitious values."
His plea is that the element of depreciation available in India cannot be applied as this relates to factors which prevail in India. He pleaded that no investigation as it was done with the buying agent to verify the bonafides of the transaction. He pleaded that the learned lower authority has fixed the price based on the information received by the Department from the manufacturers of the machines who have indicated the value of the machines as DM 3,30,000 and after allowing 70% depreciation by a thumb rule have fixed the value. He has pleaded that there is evidence of any contemporaneous import in India at this value and this was therefore not relevant for the valuation of the goods in question. He in this connection referred to the Chartered Engineer's Certificate which was produced before the learned lower authorities as per the instructions issued by the authorities. He pleaded that it has all the particulars as desired by the authorities. The authenticity of this certificate he pleaded has not been disputed by the authorities and the learned lower authority in his order has taken note of the same. He pleaded the Chartered Engineer has certified the price as agreed to between them and the supplier and the value of the machines when new is also given and based on that the appellant's price as declared should have been accepted. He prayed for setting aside the order of the learned lower authority. The following case laws were cited in support of the pleas made:
(i) 1992 (60) E.L.T. 731
(ii) 1994 (74) E.L.T. 39 (Tri.)
(iii) 1993 (68) E.L.T. 551 (Cal.)
(iv) 1994 (71) E.L.T. 394 (Tri.)
4. The learned SDR for the Department pleaded that the learned lower authority has taken note of the facts on record and has adopted the price as quoted by the manufacturer as the basis and has given 70% depreciation as per the norms prescribed by the Central Board of Excise and Customs to arrive at Section 14 read with Rule 8 of the Valuation Rules. He pleaded that the appellants have accepted the basis as above for arriving at the assessable value. He urged that the machinery imported was second hand machinery and therefore in the absence of any other price for the machines, the price of the machines when new was adopted as the basis. He pleaded the depreciation as allowed is the same as in the case of import of second hand cars and as adopted for income tax purposes for allowing depreciation.
He cited the following case l,aws in support of his pleas :
(i) 1992 (60) E.L.T. 273 (Tri.)
(ii) 1995 (77) E.L.T. 699 (Tri.)
(iii) 1996 (82) E.L.T. 3 (SC).
5. The issue therefore that falls for consideration is whether the price as declared by the appellants based on the invoice from the suppliers can be accepted as in terms of Rule 4 of the Valuation Rules read with Section 14 of Customs Act or the price has to be fixed under Rule 8 of the Valuation Rules based on the price as per the quotation obtained by the Department from the manufacturers of the machinery after allowing depreciation of 70%. For proper appreciation of the issue it is therefore necessary to reproduce Section 14 of the Customs Act and Rule 8 of the Valuation Rules. Section 14 of Customs Act read as tinder:
'14. Valuation of goods for purposes of assessment. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force where under a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be -
[*] the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale;
Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill of export, as the case may be, is presented under Section 50;
***** ****** ***** ***** (1 A) Subject to the provisions of Sub-section (1), the price referred to in that Sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf.
(2) Notwithstanding anything contained in Sub-section (1), or Sub-section (1A) if the Central Government is satisfied that it is necessary or expedient so to do it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff v^alue.
(3) For the purposes of this section, -
(a) "rate of exchange" means the rate of exchange -
(i) determined by the Central Government, or
(ii) ascertained in such manner as the Central Government may direct, for the conversion of Indian currency into foreign currency or foreign currency into Indian currency;
(b) "foreign currency" and "Indian currency" have the meanings, respectively assigned to them in the Foreign Exchange Regulation Act, 1973 (46 of 1973).' Rule 8 of Valuation Rules reads as under :
"3. Residual method. - (1) Subject to the provisions of Rule 3 of this rule, 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 Sub-section (1) of Section 14 of the Customs Act, 1962 (52 of 1962) and on the basis of data available in India."
It is seen that in the context of that after the new valuation provisions came into force the Department has issued instructions which are referred to supra under which it has been clarified that the declared value cannot be rejected without due consideration and that the value cannot also be discarded solely because it is lower than the previously accepted customs value. What is to be examined therefore is whether in the facts and circumstances of this case there are any considerations which warrant the rejection of the invoice price as declared by the appellants. In this context therefore it is necessary to examine the modalities of the transactions as entered by the appellants with the foreign supplier. It is seen from the pleas made and the evidence submitted before the learned lower authority and which has been filed before us, that the appellants had entered into the transactions through the buying agents M/s. J.R. Industries and the correspondence between the appellants and the J.R. Industries has been brought on record. It is seen that negotiations for transactions started as per the Telex copy enclosed dated 17-3-1994 during the visit of Shri Chock-alingam, Managing Director of the appellants during his visit to Europe with M/s. J.R. Mehta/J.R. Industries, buying agents and by this Telex the Managing Director was informed about the availability of the machines and the price quoted was US $ 50,000 per machine which on negotiations was agreed to for supply at US $ 40,000 per machine and the appellants were asked to take quick decision in the matter. The price so offered was confirmed by further telex, dated 22-3-1994 and the appellants were informed that the suppliers were not prepared to come down below US $ 40,000 per piece and this price was negotiated as final price and 5% discount sought for by appellants was not agreed to and it was suggested that Shri Chockalingam should visit Seoul in April for inspection of the machines and the machines were to be held over until April 5 for auction purposes. An order was placed and the machines were also examined as seen from the Telex of M/s. J.R. Industries dated 12-4-1994 wherein it is indicated that the appellant's Managing Director Shri Chockalin-gam reached Seoul and the order has also been found to have been placed by the appellants at US $ 40,000 and confirmation has been sought for from M/s. J.R. Industries and it was promised to be sent through their Telex dated 12-4-1994. The order of confirmation was sent by M/s. J.R. Industries under the cover of their letter dated 29th April,1994 and the order of confirmation from the principals of M/s. EST Fibres. In Roterdam was sent and the appellants were asked to open the letter of credit. The transactions it is seen therefore was concluded through M/s. J.R. Industries who had placed orders for supply from M/s. EST Fibres in Roterdam who have been shown as principals of M/ s. J.R. Industries and the supplies by the said Roterdam firm were arranged through Korea for the appellants. From the above facts it is clear that the appellants had entered into transactions through normal business negotiations through the agents in India who has arranged the supplies through M/s. EST Fibres in Europe. The correspondence referred to above also shows that there was a negotiation about the price. The original quoted price of US $ 50,000 per machine was reduced to US $ 40,000 and another effort to get further price reduction was not agreed to by the suppliers. The transaction therefore as seen from the records before us appears to be clearly a normal business transaction. It is seen that the appellants had informed the authorities about the modalities of the transactions through M/s. J.R. Industries. The Department authorities it is seen from the records before us have not choosen to make any enquiries with M/s. J.R. Industries as to the modalities of the transactions to verify the genuineness of the transactions as entered into by the appellants under the normal course. If the authorities had information as has been set out in the order of the learned lower authority that second hand machinery had been under-valued there is no reason why the authorities would not make further enquiries with the agents through whom the transaction had been arranged to as certain the fact as to the under-valuation. This would also have been necessary to find out the extent of under-valuation and also the modus-operandi adopted in this regard. The authorities however for the reasons best known to them have refrained from doing so. There is nothing on record to show nor there is any finding by the learned lower authority that the appellants had adopted any fraudulent means or the transaction as entered into by the appellants through the agent was only a facade to cover up the real facts regarding under-valuation. We observe that in terms of Rule 4 of the Valuation Rules under which and in the light of the instructions issued by the Department as above, before any invoice value is rejected a basis has to be laid as to why this transaction value is not acceptable. As seen from the instructions above even where there are imports at higher price earlier the transaction value for that reason alone cannot be rejected. What has to be shown therefore by the authorities is that the transaction value as reflected was manipulated one and that there were circumstances indicating that the transaction was not entered into in the normal course of business and there are other factors which have influenced the invoice value. There is no finding from the learned lower authority that this is so in the present case. We are of the view unless a basis is laid to hold that the transaction value is not acceptable for the reason that it is not normal business transaction for any of the reasons set out as above and that the requirements of Rule 4 had not been satisfied the invoice value produced cannot be rejected. In our view in this context therefore taking into consideration the manner in which the transaction was entered, the negotiations entered into by the appellants through the agents and the fact that the genuineness of the transaction has not been doubted or any basis laid to reject the same in this regard the invoice value should have been accepted for assessment purposes under Section 14. We observe that the learned lower authority has merely taken a note of the statement of Shri Chockalingam before the Customs authorities under Section 108 of Customs Act, 1962. In that he has accepted the fact that he has inspected the machinery and he has informed the fact that they had negotiated the price. This inspection was done under the instructions of M/s. J.R. Mehta of M/s. J.R. Industries who are their buying agents. The invoice has been raised by the Roterdam firm at the instance of the suppliers of the machines. It is also mentioned that the machines were inspected and a Chartered Engineer's certificate was also arranged. The authorities find fault for not producing the original invoice of the machines when they were sold by the manufacturers. We observe that the appellants had entered into the deal through the agents who have supplied the machines at the instructions of the principals. The question, therefore, of the appellants having no original invoice of the machines when first sold by the manufacturers or the machines now sold would not arise. No fault can be found for this reason against the appellants. In the statement recorded from the General Manager which has been reproduced above, a reading of the statement shows that Shri Chockalingam has allowed the Department to raise the value for the compulsion of time. This cannot be taken to be acceptance of the price as decided by the authorities.
6. We observe that the Hon'ble High Court of Calcutta in the case of Sandip Agarwal v. Collector of Customs reported in 1992 (62) E.L.T. 528 in the context of valuation of the goods under amended provisions of Section 14 in the context of charge of under-valuation and whether the invoice value declared should be accepted in terms of Rule 4 of the Valuation Rules and Section 14 of the Customs Act as providing the basis for arriving at the assessable value has analysed the position and held as under in paras 32 and 33 :
32. Section 14 of the Act has to be read along with Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (hereinafter referred to as the said Rules). Under the said Rules, only in case it is not possible to arrive at the transaction value, then other method provided by the said Rules has to be followed. In this connection Rules 2 (f), 3 and 4 of the said Rules are set out hereunder :
"2. Definitions. - (1) In these rules, unless the context otherwise requires, -
(f) "transaction value" means the value determined in accordance with Rule 4 of these rules.
3. Determination of the method of valuation. - For the purpose of these rules,
(i) the value of imported goods shall be the transaction value;
(ii) if the value cannot be determined under the provisions of Clause (i) above, the value shall be determined by proceeding sequentially through Rule 5 to 8 of these rules.
4. Transaction value. - (1) The transaction value of imported goods shall be the price actually paid or payable for the goods sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules.
(2) The transaction value of imported goods under Sub-rule (1) above shall be accepted, provided that -
(a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which -
(i) are imposed or required by law or by the public authorities in India;
(ii) limit the geographical area in which the goods may be resold; or
(iii) do not substantially affect the value of the goods;
(b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued;
(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and
(d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for Customs purposes under the provisions of Sub-rule (3) below.
3 (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price.
(b) In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time :
(i) the transaction value of identical goods or of similar goods, in sales to unrelated buyers in India;
(ii) the deductive value for identical goods or similar goods :
Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of Rule 9 of these rules and cost incurred by the seller in sales in which and the buyer are not related ;
(c) substitute values shall not be established under the provisions of Clause (b) of this Sub-rule."
33. The normal principle for arriving at a price is to ascertain the transaction value in terms of the provisions of Section 14 (1) of the Customs Act, 1962. The said Valuation Rules provide for the method of valuation. The value of the imported goods shall be the transaction value. The said Rules, inter alia, lay down that if it is not possible to arrive at a transaction value then the other rules of the said Valuation Rules which are framed thereunder are to be followed sequentially. Rule 4 of the said Valuation Rules, 1988 deals with transaction value. The transaction value means the value determined in accordance with the provisions of Rule 4 of the said Rules. According to Rule 4, the transaction value of the imported goods shall be the price actually paid or payable for the goods when sold and it also provides that the transaction value shall be accepted. Therefore if the transaction value is available i.e. the price actually paid or payable is available, then assessable value shall be determined by accepting the price actually paid or payable unless it is found to be not genuine. In the instant case since there is no evidence whatsoever of any contemporary imports of identical goods of identical quantity at higher rate and since there is no evidence that the appellant remitted to the foreign supplier any amount clandestinely more than the amount the appellant actually paid the transaction value under the provisions of Rule 4 is available and as such the same has to be accepted by the authority concerned.
The position as we have discussed in the facts and circumstances of the case as above and the view we have expressed in the present case that the invoice value could have been accepted for assessment purposes is in conformity with the views as held by the Hon'ble High Court of Calcutta as above. The learned adjudicating authority in the present case it is seen has not appreciated the position correctly as to the scope of the amended provisions of Section 14 read with Valuation Rules. Once the value under Rule 4 could not be discarded the question of their valuation under Rule 8 would not arise. In the present case there is no valid reason on facts or in law nor any basis has been laid by the learned lower authority in this regard to discard the invoice value. In our view on facts on record the price satisfies the requirements of transaction value in respect of the goods in terms of Rule 4. In the absence of any allegation that the parameters of transaction value under Rule 4 are not in any way satisfied there is no choice with the authorities but to assess the goods based on this transaction value. The learned lower authority therefore could not have in law taken resort to the Rule 8 under the Valuation Rules. The learned lower authority it is seen has proceeded on the assumption since the machines imported are second hand machinery there could not be a transaction value in respect of the same and therefore the learned lower authority has relied on a quotation by way of information furnished by the manufacturers of the machinery about the value of the machines as in the year of manufacture of the machines imported, thereafter proceeded to give depreciation of 70% on the same. This method has been adopted by the learned lower authority based on the instructions from the Board and the Ministry for arriving at the value of the second hand machinery. We observe these instructions which are relied upon are issued before the new valuation provisions came into force in 1987 and the subsequent instructions of the Ministry under which clear directions has been given that the transaction value and the invoice value should normally form a basis of the assessable value and which value should not be discarded without laying a basis for the same. Even when there are earlier imports at higher value unless for valid reasons the price of the goods cannot be taken to have satisfied the criterion laid down for transaction value under Rule 4 resort cannot be had for valuation under other valuation rules. The authorities should have therefore resorted to the latter instructions of the Ministry and the Board which conform with the judgment of the Hon'ble High Court of Calcutta cited supra. Just because the machinery imported is second hand does not by itself rule out that the invoice value cannot be considered as transaction value. It is possible that the authorities might not have date of imported price of similar machines contemporaneously imported and also that No. 2 sets of second hand machineries may not be similar in all respects and therefore there may not be any comparable value. But having a comparable value is not a precondition for accepting the transaction value. What has to be seen before the transaction value is discarded is that the transaction was such that it was not in the normal course of business and there were some extraneous factors having a bearing on the price or the basis of price and the invoice produced was a manipulated one and there were other conditions like extra payment etc. pointing to the value being not correct. There is nothing in the learned lower authority's order to show that any one of these factors existed nor any evidence has been produced before us. In our view applying the rule of thumb for arriving at the value of the second hand machinery by giving depreciation limiting upto 70% with the scale of depreciation at the rate of 4% for every quarter for the first year, 3% per every quarter for the second year, 2a/2 for every quarter for the third year and 2% per year for the subsequent years subject to a maximum of 70% is against the very spirit of Section 14 and the Valuation Rules framed thereunder. Rule 4 in such a contingency in case second hand machineries is to be valued based on this formula would become redundant so far as the import of the second hand machinery is concerned. We see no such warrant in law either tinder Section 14 or under the Valuation Rules. The law has to be so interpreted that in no contingency any part of the same becomes redundant by a given interpretation. In case the authorities had any doubt that the second hand machinery was not valued correctly they should have caused necessary investigation to be done either with the buying agents or with their principals or from the Korean suppliers of the machineries through their (governmental) agencies and if there was any evidence gathered to show that the price declared was not correct, they would have been fully justified in discarding this price and brought into reckoning alternative methods of valuation under the rules by applying the rules seriatum as provided for under the law. Without having brought on record any facts in regard to the element of under-valuation on the part of the appellants the authorities should not have therefore resorted to Rule 8 for valuation. We find that the burden of proof rests with the Department. In this present case we observe this burden has not been discharged. In the above view of the matter we hold that leased on the facts on record no case of under-valuation has been made out against the appellants and the appellants invoice value has to be accepted as assessable value. We therefore allow the appeals with consequential relief.