ORDER
V.K. Asthana, Member (T)
1. These appeals are against Order-in-Appeal No. 114/96, dated 5-7-1996, wherein, the present appellants have agitated upon the issue of valuation of two second hand and used machines viz. Mixing Mill and six inches NRM Extruder. These were imported under two Bills of Entry both dated 21-7-1993. The importers had declared invoice value of the mixing mill as US $ 21,357 (CIF) and for the extruder US $ 24,921 (CIF). They had also produced a Chartered Engineer’s certificate from USA who had certified the year of manufacture of the two machines, the value of equivalent new machinery in terms of US Dollar as well as that the negotiated price at which these machines were imported was found by the Chartered Engineer to be fair.
2. Heard Shri A. Sundar Rajan, learned Advocate for the appellants who submits that the declared transaction value on the Bills of Entry were not accepted by the Custom House and instead straightaway Rule 8 of the Customs Valuation Rules was applied by giving periodical depreciations on the price of the new goods as estimated in the Chartered Engineer’s certificate as catalogue price for these machines for the year of manufacture were not available on record. Learned Advocate submits that this rejection of the transaction value declared was not in terms of Section 14 read with Valuation Rules 4 (2) and 4(3) inasmuch as that there was no evidence led by the department to prove any fraud or any illegal extra payments made by the importer to the foreign exporter. Neither has the department led evidence of any contemporaneous import at higher price of identical machines. He, therefore, submits that the issue is already a covered one and cites the decision in the case of Rugmini Ram Raghav Spinners Pvt. Ltd. v. C.C. reported in 1998 (103) E.L.T. 366 (Tribunal) and in the Final Order No. 1560/98, dated 11-8-1998 [1999 (107) E.L.T. 94 (Tribunal)] passed by the South Zonal Bench of the Tribunal in the case of Essar Graphics (P) Ltd. In both these decisions, learned Advocate submits, it has been held that the transaction value supported by Chartered Engineer’s certificate cannot be rejected without either contemporaneous imports at higher price or proof of fraud in transaction. Since either of these are not alleged b) the department, therefore, he submits that the transaction value declared or the Bills of Entry should be accepted.
3. Heard Shri S. Kannan, learned JDR, who reiterates the Order-in-Appeal and submits that the system of valuing second hand machiner) by giving depreciation on the cost of new identical machinery was a well es tablished practise in all Custom Houses and, therefore, in this case no new procedure was followed.
4. We have carefully considered the rival submissions and the records of the case. We find that the issue is no longer res integra as it is covered by the decisions noted above. We find that the facts with respect to the two machines under consideration before us is exactly the same as was considered in these two judgments inasmuch as that the second hand machinery prior to its im-port was inspected by the Chartered Engineer located abroad and the said Chartered Engineer has given a detailed certificate evidencing to the best of his ability and experience, the age of the machines, the operational capability of the machines, the fact that the machines were re-conditioned prior to their sale to the present appellants, the estimated international price of similar new machines and also the fact that the present transaction value on a consider-ation of the inspection of these machines appeared to be very reasonable to him. We find that in the decision of Rugmini Ram Raghav Spinners Pvt. Ltd. su-pra, this issue was considered in great depth in paras 10 to 13 and it was held as follows :-
10. We find that in view of aforesaid discussions, the law has now evolved on valuation of second hand machinery imported as follows :-
(i) That second hand imported machinery valuation is normally to be done on the basis of Section 14 read with Rule 4 i.e. being second hand machinery ipso facto, does not mean that the transaction value under Rule 4 ibid is to be discarded per se; and
(ii) That further when a Chartered Engineer’s Certificate supporting the transaction value is produced, it cannot be rejected without either contemporaneous imports of like goods at higher values being shown or proof of the transaction not being in normal course of international trade etc.
11. On the other hand, the case laws cited by learned SDR are much older than the ones discussed above and so stand superceded in time. Also the decision in Rakesh Press -1995 (77) E.L.T. 699 (Tribunal) has been distinguished in Preto Industries (cited supra).
12. Applying this settled law to the present facts, .we find that the impugned Order-in-Original needs to be set aside because :
(i) No instance of contemporaneous imports of like goods has been cited therein, nor it is alleged that fraud is involved in the transaction;
(ii) The transaction value of the invoice, duly supported by Chartered Engineer’s Certificates (foreign & local), stands rejected merely on these certificates not having details of basis of valuation and
(iii) That after rejecting the transaction value under Rule 4 wrongly on this basis, the order straight-away proceeds to Rule 8, without even a word on why the other intervening rules do not apply.
13. We find that unless Rule 4 is clearly held as not applicable due to either fraud etc or contemporaneous imports at higher prices, we cannot proceed to apply any other subsequent Rule, let alone jump straightaway to Rule 8, merely because the manufacturer’s price for original goods is available. Section 14 (read with Rule 4) recognises the primacy of transaction value, whether it be new goods or second-hand machines. What is material is that the transaction be successfully challenged with strong evidence either on contemporaneous imports of like goods or that the transaction is tainted by fraud or that the price is influenced by abnormal considerations/relationships. It cannot be held to be tainted merely because the price of original (new) goods ascertained from the manufacturer at that time was much higher. It may raise suspicion, but that is not good enough to discard the invoice value. This is because, the subject transaction is between independent buyer and seller for second-hand goods, as specified, i.e., on “as is” C & F Madras basis, and therefore unless Rule 4 is held inapplicable as discussed above, such a transaction value cannot be rejected in favour of a notional value arrived at under Rule 8 from new goods in country of manufacture even if a handsome depreciation of 70% is given. In other words, law does not allow rejection of transaction value under Rule 4 by ab initio application of Rule 8; that would be putting the cart before the horse. The principle involved is that the ‘actual’ cannot be superceded by the ‘deemed’, unless the ‘actual’ is first rejected in terms of Section 14 read with Rule 4 ibid.
5. Applying the ratio of the said decision to the facts of this case, we are of the clear opinion that the said ratio is fully applicable to the facts of this case. In view of the discussions analysed above, therefore, we set aside the Order-in-Appeal impugned and allow the appeal with consequential relief as per law.