Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Blue Star Enterprises on 6 November, 1995
Equivalent citations: 1996(81)ELT287(TRI-DEL)
ORDER
U.L. Bhat, President
1. Respondent imported old spare parts of 86 used diesel engines from abroad valued at Rs. 5,98,646.00 CIF. Bill of Entry is of 30-5-1994, invoice is dated 22-3-1994 and Bill of Lading is dated 30-3-1994. Assessee did not produce Chartered Engineers' Certificate or manufacturer's invoice but furnished certificates from the suppliers giving the year of manufacture of engines and price of the engine in the year of manufacture and also indicating that the residual life was over five years. Machines were manufactured during the period 1982 to 1987. Import was apparently made under OGL. The Assistant Collector issued a show cause notice along-with work sheet stating that he was not prepared to accept the declared value and proposed to assess the value adopting the price at the time ot manufacture less depreciation of 70% and also proposed levy of penalty. The assessee objected to the show cause notice. But the Assistant Collector passed a final order on the same basis. Assessee filed an appeal before the Collector (Appeals), who set aside the order and directed acceptance of the declared value and reduced redemption fine from Rs. one lakh to Rs. 50,000.00. The department, being aggrieved, has filed this appeal.
2. It is contended that there is no ready market for used diesel engines and, therefore, there is no question of adopting the transaction value or the transaction value of similar comparable goods and the only method is to adopt the price less depreciation method and that was followed by the Deputy Collector. The department has placed reliance on earlier decisions of the Tribunal.
3. In Muddeereswara Mining Industries Co. v. Collector of Customs - 1989 (39) E.L.T. 630 (Tribunal) in relation to second-hand sawing machine imported the Tribunal adopted the best assessment judgment method on the ground that it was not done on any whimsical basis. The Tribunal indicated it is not a situation where a large number of second-hand machines of identical make and model, having identical period of use and being in identical condition at the time of import were available for ascertaining the price ordinarily charged for them and, as such, there is no scope for comparison. In Photo Copy Centre v. Collector of Customs - 1991 (56) E.L.T. 801 there was import of old and used photo copiers in SKD condition in the guise of spares in two different consignments but in the same vessel. There is a case of misdeclaration of the description of the goods. It was, therefore, held that the declared price cannot be said to be the transaction value and the question of its acceptance did not arise. The Tribunal also indicated that the burden lay on the department in bringing sufficient evidence on record. In Pragati Press v. Collector of Customs, New Delhi, -1994 (72) E.L.T. 620, offset printing machine and paper folding machine were imported. The adjudicating authority disregarded the Chartered Engineers' certificates. The authority relied on a letter from the local agents regarding prices. The authority adopted the depreciation method which was not interfered with. In Gajra Beval Gears Ltd. v. Collector of Customs, Bombay -1995 (79) E.L.T. 82, second-hand spline milling machines of 1986 make were imported, while the licence was for import of machines of 1984 make. It was, therefore, held that the invoice price was not acceptable. On the facts it was found that question of finding identical contemporaneous imports did not arise. Manufacturer's price of machine was not produced by the assessee. The Tribunal upheld the depreciation method adopted and the percentage of depreciation allowed as it was on the basis of Chartered Engineers' certificate.
4. We may now advert to the decision of the Calcutta High Court in Debabarata Ghosh (supra) which dealt with a case of import of second-hand car purchased at public auction. Auction receipt was produced before the Customs authorities. It showed the payment of price of pounds sterling 1323. The Assistant Collector determined the value at Rs. 13 lakh which was confirmed by the Collector (Appeals). The Court considering Section 14(1) of the Customs Act, 1962 and the rules framed thereunder, came to the conclusion that there is no conflict between Rule 8 of the Rules and Section 14(1) of the Customs Act, 1962. The Court also took the view that statutory authorities ignored the provisions of Rule 8(2)(ii) and 8(2)(iv) indicating payment of higher duty. The Court indicated, in the circumstances of the case, fixing of value taking into account the world car catalogue price was arbitrary and erroneous. There is no question of conflict between the scheme of valuation contained in Rules 3 to 8 of the Rules and Section 14(1) of the Customs Act, 1962.
5. It is true that the assessable value is always deemed value i.e. the price at which such or like goods are ordinarily sold or offered for sale for importation or exportation, as the case may be, in the course of international trade where the seller or buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. Sub-section 1(A) of Section 14 states that subject to the provisions of Sub-section (1), the price referred to in Sub-section (1) in respect of imported goods shall be determined in accordance with rules made in this behalf. The Customs Valuation (Determination of Price Goods) Rules, 1988 are the Rules made in this behalf. Rules denned "goods of same class or kind", "identical goods," "similar goods" and "transaction value". According to Rule 3, for the purposes of the rules, value of imported goods shall be the transaction value and if the value cannot be determined on the basis of transaction value, the value should be determined by proceeding sequentially through Rules 5 to 8 of the Rules. Rule 4 relates to transaction value which is the price actually paid or payable for the goods when sold for export to India adjusted in accordance with provisions of Rule 9. Rule 4, in the light of provisions of Sec. 14, would indicate that in order that transaction value should be adopted as the assessable value, it must be genuine value; in other words, in a case of under-valuation, transaction value cannot as such be adopted as assessable value. Rule 5 deals with transaction value of identical goods. Rule 6 deals with transaction value of similar goods; Rule 7 deals with deductive value and Rule 8 refers to residual method which is the best judgment method. As indicated earlier, the assessable value under Section 14(1) of the Act is deemed value. But transaction value can be deemed value where the former is genuine, subject, of course, to the conditions mentioned in the proviso to the Rule 4(2). Acceptance of transaction value in a given case does not mean that the concept of deemed value does not apply. Where the transaction value is acceptable that itself would be the deemed value. The Rules are only guidelines to effectuate the statutory provisions in Section 14. There is no conflict between Section 14(1) of the Act and the Rules.
6. Where the statutory authority has reason to suspect the transaction value on the basis of proper reasons or materials, he is not required to accept the same. The authority can consider the application of the other Rules sequentially. The authority has a duty to cause enquiries to be made to find out whether there is international trade in the particular kind of goods imported and the'price of such goods sold or offered for sale for delivery at the relevant time. Whether there is international trade in relation to a particular kind of goods and whether any such price contemplated in Section 14(1) can be found is a question of fact. There must be some reasonable ground for the authority to come to a conclusion that there is no such international trade or that there is no such price. If on the basis of proper reasons, it is possible for the authority to come to a conclusion that the transaction value is either not genuine or unacceptable, methods suggested in Rules 5 to 8, can be considered sequentially.
7. The Deputy Collector, in the show cause notice, did not indicate the existence of any reason for belief that the transaction value is either not genuine value or there is reason to suspect it. The notice merely contains an observation that there is no international trade in used machines. That also cannot be a matter of assumption but a matter to be supported by materials which are lacking in this case. The show cause notice did not indicate that any specific enquiries were made in this regard by the authority. The same is the position in regard to order passed by the Deputy Collector. It is, therefore, clear that the order of the Dy. Collector is based entirely on assumption and supposition, not supported by reasons or materials.
8. We may not be understood to imply that the depreciation method cannot be adopted in case of import of used goods. The proper method to be adopted in a case will depend on the facts and circumstances of the case and the reasons that the authority may find in the case. On the facts of the present case, it cannot be said that transaction value cannot be adopted. The Collector (Appeals) came to the conclusion that transaction value has to be adopted though the matter has not been considered in proper prespective. However, for the reasons indicated above, the order of the Collector of Customs deserves to be confirmed and is hereby confirmed. The appeal is, accordingly, dismissed.