ORDER
C.N.B. Nair, Member (T)
1. This appeal is directed against the order in original C.A.O. No. 367/2001/CAC/CC/MCT, dated 7-11-2001 of Commissioner of Customs (Import), New Customs House, Mumbai. Under the impugned order the Commissioner confiscated a second hand BESR Barudan (Japan) embroidery machine imported by the appellant herein under Section 111(d) and 111(m) of the Customs Act. The importers were, however, allowed to redeem the goods on payment of a fine of Rs. 4 lakhs. A penalty of Rs. 1 lakh was also imposed on them under Section 112(a) of the Act. The confiscation was on the ground that the appellants had mis-declared the model and year of imported machine and the value of US $ 7500 declared in the invoice was a mis-declared lower price, the correct price being US $ 40000. The import was under invoice dated July 18, 2001 and the goods had been declared in the certificate issued by the Chartered Engineer manufactured in 1993. The year of manufacture was significant inasmuch as import of more than 10 years old machinery was not permissible under the Import Policy for the relevant period.
2. The impugned order fixed the age of the machine based on the report of the Indian Agent of Barudan, Japan that BESR series machines were manufactured between 1985 and 1989. The valuation of the machine was based on price data available at CTC Used Equipment Data Base which showed Barudan BESRH UF-20, 1989 as available at plus-minus US $ 45000. During the investigation of the case, the appellants’ representative had also given statements to Directorate of Revenue Intelligence Officers that the actual transaction value of the machine was US $ 40000, but the same had been entered in the invoice at US $ 7500 to avoid customs duty. It was also stated to the investigation that the machine was of the year 1989, however, it was shown as of later year only to bring the machine within the permissible age for import. Even though the statements confirming the higher value and manipulation of year of manufacture had been recorded on 13-9-2001 from Shri Rajesh Kumar, Manager of the importer and Shri Mahesh Kumar, Partner of the importing firm, during the personal hearing before the adjudicating authority, the importer retracted on the statement and contended that the transaction value of US $ 75000 had been correctly entered in the import documents and that statements affirming a higher value was made before the DRI authorities under threat. It was also stated that they had not paid any higher value for the goods. It was also submitted that the year of manufacture of the machine is to be taken as the year mentioned in the report of Chartered Engineer of Korea who had certified the machine as of 1993 manufacture.
3. In the present appeal, the appellants have contended that the actual price of the machine was as declared in the invoice and that the model number as entered in the certificate of the Chartered Engineer is also 1993. It is also re-iterated that the purchase was made through negotiations at an exhibition of machinery at Delhi and the entire proceedings were illegal. The learned Counsel for the appellant emphasized that apart from the fact that the statements in question had been recorded under coercer as dictated to by the investigating officers, the method of valuation adopted by the customs authorities was entirely faulty. According to him, data on a Website cannot be the basis for valuation. It does not relate to actual transactions. He also pointed out that the valuation as undertaken by the customs authorities is not legal inasmuch the value is not based on the methods prescribed in the Valuation Rules, namely contemporaneous import value of identical goods or similar goods or value worked out from the sale price in India of imported goods. He has pointed out that, even though the impugned order has mentioned valuation based on Rule 8, a valuation based on internet prices can not be considered a reasonable method consistent with the principals and general provisions of Valuation Rules or Sub-Section (1) of Section 14 of the Customs Act.
4. With regard to the year of manufacture of the machine, learned Counsel has submitted that it is on record that the examination of the machine had shown that no year of manufacture has been displayed on the machine. Year of manufacture has been fixed merely going information furnished by the Indian Agent of Barudan that BESR series machines were manufactured between 1985 and 1989. He contended that such a general statement cannot be given more weight from the certificate of the Chartered Engineer.
5. Learned Counsel has also submitted that developments subsequent to the confiscation have established beyond any doubt that the findings in the impugned order were entirely erroneous. He pointed out that since the machine had been confiscated and an unreasonably higher value fixed for its assessment, the appellants wrote to the Commissioner of Customs on 29-10-2001 that the documents furnished for the import of the goods were correct and reliable and the foreign supplier had intimated that more such machines are available for sale to anyone willing to buy them at the same price. This showed the innocence of the appellants. They had, accordingly, sought release of the goods on payment of duty on the declared value. Subsequently, on 13-2-2002, the importer again wrote to the Commissioner restating the same facts and informing that they are not in a position to clear the goods on payment of duty, fine and penalty. Therefore, they surrendered the goods and requested that the machine may be sold by public auction. The appellants concluded this letter by stating that “the auction value of the goods in fact would indicate that the machine is not valued at US $ 40000 but was valued at US $ 7500 only and would show that there was no under invoicing of the goods”. The learned Counsel pointed out the appellants’ statements were proved by the subsequent sale in auction the goods at a cost of Rs. 6 lakhs only, a price some what comparable according to the Counsel, to the declared value, and a fraction of the value of US $ 40000 fixed in the adjudication.
5. As against the above submissions on behalf of the appellants, learned DR has pointed out that the year of manufacture of the machine has been fixed based on the information furnished by the Indian agent of the Japanese manufacturer, who has, in turn, obtained the information from the manufacturers’ at Singapore Office. The learned DR has also pointed out that the appellants’, representatives had confirmed the value and year of manufacture in their statements. He justified the impugned order based on these. Subsequently, copies of Internet data and the report of Indian Agent have also been filed.
6. The year of manufacture has been fixed as 1989 based on the report of Shri R.K. Khanna, the Indian agent of Barudan, Japan vide his fax dated 11th September, 2001 that he has been informed by his principal i.e. Barudan, Singapore that manufacture of the model BESR series was between 1985 and 1989. There is no other evidence on this. The machine itself did not indicate any year of manufacture. The appellants’ contention is that the certificate of the Chartered Engineer who is an independent party should be accepted. A perusal of the “CTC Used Equipment Data Base” shows that this data base mentions two entries of BESR-H-UG 1990 and BESRE UG 1990. Thus, the records collected during investigation itself is found to show that there were BESR series later than 1989, at least that sellers are supplying BESR series later than 1989. The machine imported by the appellant has been certified as manufactured in 1993 by the Chartered Engineer from the country of supply (Korea). The information relied on by the adjudicating authority has been purportedly obtained by the Indian Agent from the Singapore office of the manufacturing company, Barudan Company Limited, Japan. The information is not directly from the Japanese manufacturer. It also does not give particulars about the machine under import, such as machine No., year of manufacture, or other particulars. Since the internet data relied upon by the revenue (even though for another purpose i.e. valuation of the goods) shows BESR series machines of 1990, it is clear that evidence on the age of the machine is neither definite nor one way. Therefore, it can not be conclusively held that BESR machines were manufactured only upto 1989 and any certificate showing a later year of manufacture is false.
7. With regard to the valuation of the machine under import, evidently its subsequent sale in auction at Rs. 6 lacs, undermines the finding that the normal value of the machine would be 40000 to 45000 US $. Apart from this, the valuation has been arrived at under Rule 8. That rule is the residual method for the valuation of goods. The impugned order has adopted price mentioned in “CTC USED Equipment Data Base”. This describes itself as “North Americas Full Service Provider with over 25 Years Experience”. It is evident that prices mentioned are not prices for sale from Korea to India. It is common that prices of second hand equipment are a matter of negotiations based on the condition of the machine at the time of sale, residual life, State of technology etc. North American DATABASE can hardly be reliable information about sale of second hand machines from Korea to India. Further, even though the impugned order starts off with the statement that “An intelligence was received by DRI that more than 10 years old second hand embroidery machines of Barudan and Tajima Brand are being imported by grossly under valuing them through Mumbai and Nhava Sheva ports”, the impugned order furnishes no data about the import of second hand embroidery machines at any port in India, let alone Mumbai and Nhava Sheva Ports. A credible challenge to transaction value declared in import documents, normally arises from import prices of contemporaneous imports of comparables goods. The Customs Valuation rules also specifically stipulate comparable value of identical goods and similar goods as reliable basis for valuation of goods, in cases where transaction value is rejected. The Rule also permits of the use of sale prices in India of identical or similar imported goods. No such tangible evidence is available in the present case. The evidence relied on is North America’s Internet prices and the statement of the importers themselves to investigating authorities. There is no material supporting these prices. We consider these materials grossly insufficient. We are of the opinion that the effect of the absence of any comparable imports, and the subsequent auction sale of the imported machinery at a fraction of the value fixed in the adjudication order, goes only to show that the value fixed is not reasonable, sound or reliable.
8. For the reasons stated above, we are of the considered view that the impugned order cannot be sustained. It is, accordingly, set aside and the appeal is allowed, with consequential relief to the appellants.