ORDER
C.N.B. Nair, Member (T)
1. The appellant M/s. Spice Communications Limited is a provider of Mobile Telecom Service. For setting up that facility the appellant imported fifteen units of BTS at Delhi in Nov., 2002. These were used machines and were purchase at a cost of US $ 12500 per piece. The invoice from 2nd Source Wireless, USA described the item as “Motorola M CELL BTS Cabinet (900MHz) – used” Inspection certificate from Chartered Engineer has also been filed. This certificate stated that the manufacturer was Motorola, United Kingdom and year of manufacture was 1995. About the price, Chartered Engineer certificate stated as under :-
“We estimate the current value of the equipment, at that time (i.e. in the year 1995) to be US $ 35,000. We consider the price asked by the seller namely US $ 12,500 per BTS cabinet CIP New Delhi to be reasonable”.
2. Goods on arrival at Delhi were examined by the Customs. It was noticed that all the BTSs, except one, have year of manufacture marked as 1998. One of them was of year 1999. Based on the discrepancy about the year of manufacture (between the Chartered Engineer certificate and the examination report) customs authorities proceeded to re-fix the value of the imported goods. The importer contested the proposed enhancement. The case was adjudicated by the Commissioner of Customs (Imp. & Gen.), New Custom House, New Delhi. He confirmed the charge of undervaluation and enhanced the declared value with the following finding :-
“The Chartered Engineer has taken the value of US $ 35,000 per piece as that of the year 1995 as year of manufacture. From scrutiny of this letter and manner in which it is written, it is clear that the age of the equipment seven years would have weighed in the mind of the Chartered Engineer heavily while accepting the price of US $ 12,500 per BTS as reasonable. Had the age of equipment been four years in his mind while working out the price as in the year 2002, the reasonableness of the per unit price would have been otherwise than US $ 12,000 per BTS. This is being concluded by me for the reason that in the preceding line in the certificate the current value of the equipment at that time (i.e. in the year 1995) is quoted as US $ 35,000 per piece. In view of these specific positions, the error cannot be deemed as typographical error and appears by design.
It is very clear from the examination report that 14 BTS cabinets are of 1998 and one is of 1999 and this is admitted by the Importer as well as in the revised certificate issued by the Chartered Engineer. I understand, that the Chartered Engineer is paid for the job and he has to do his job properly. It appears either he has not inspected the equipment of deliberately issued the actual year of manufacture as 1995. Moreover he has issued identical certificate for each consignment of five BTS cabinets, whereas 14 BTS cabinets are of 1998 and one of 1999. The certificate thus appear to have been prepared with design to mislead the Customs.
In view of the foregoing, I am of the view that current value of the equipment as in the year of manufacture as fresh equipment as US $ 35,000, should be accepted as value of the new original equipment in the years 1998 and 1999 and based on this price for 14 BTS and 1 BTS the price at the time of import should be determined after giving due depreciation and duty should be demanded accordingly.
Keeping in view the above, depreciated value on US $ 35,000 after allowing 46% comes to US $ 18,900/- per piece for fourteen units and of 38% it comes to US $ 21,700 for one unit. This depreciation has been worked out in terms of Central Board of Excise and Customs Circular issued vide file No. 493/124/86 Cus. VI, dated 19-11-1987 and I understand that duty should be determined now on the revised value.
Accordingly, the assessable value comes to Rs. 1,45,90,513/- as against the declared value of Rs. 97,45,806/- and the duty payable is Rs. 31,80,732/-(Calculation sheet attached) instead of Rs. 21,24,585/- as declared in three Bills of Entry totalled together”.
Based on the above finding, the appellant was directed to pay a higher duty of over Rs. 10.05 lakhs and the goods were confiscated for misdeclaration of value and ordered to be redeemed on payment of a fine of Rs. 7 lakhs. A penalty of Rs. 1 lakh also was imposed. The present appeal challenges this order.
3. The contention of the appellant is that valuation of the used BTSs based on the depreciation method (from a purported value of US $ 35,000 per piece in 1995) was totally unnecessary, and against valuation law. It is being submitted that Customs Valuation Law contemplates valuation of goods based on their transaction value. And that position is the same irrespective of whether the goods under import are new goods or used goods. The appellant has submitted that in the present case the transaction value was a negotiated price and there is no evidence brought on record to cast any doubt on the commercial character of the transaction value. It is being contended that the valuation certificate of the Chartered Engineer and the estimation of value made by him cannot override the transaction value. This is apart from the fact that, as subsequently clarified, the year of manufacture was entered as 1995 (as against the correct year of 1998-99) by mistake in the certificate. During the hearing of the case learned Consultant representing the appellant also emphasized that price information available only confirms the acceptability of the transaction value. In this connection, appellants have submitted that there was steep fall in telecom equipment prices from year to year. They have submitted that the price of new BTS itself has fallen from 79,600 US $ in 1997 to 18,500 US $ in 2003. In support of this submission they have produced two Bills of Entries and invoices showing import of same BTS at a price of US $ 18,500 by them in April, 2003 and August, 2003 from Motorola. The learned Consultant has also emphasized the fact that the used BTS under import were no more being produced as pointed out by the Chartered Engineer. He has submitted that this aspect also justified the acceptance of the invoice price as genuine.
4. Learned SDR has emphasized that the impugned order has been passed in terms of the valuation method adopted by the appellant’s Chartered Engineer himself and therefore, it cannot make a grievance about it. He contended that a valuation made based on an incorrect assumption of year of manufacture cannot be accepted.
5. We have perused the records and considered the submissions made by both sides. There is no evidence on record which shows that the transaction value between the parties was influenced by any consideration other than commercial. The only reason for the rejection of the transaction value is that the Chartered Engineer had certified to the reasonableness of the price based on the assumption that 35,000 US $ was the price of the new machine in the year of 1995 and that was the year of manufacture of the machines. But that is only a certificate of an expert to the effect that the transaction value was reasonable. The inaccuracies in that report cannot be the sole reason for rejecting the transaction value, particularly when the materials produced by the appellant show that the price of BTSs was falling steeply. That too when the model in question had become obsolete. These facts support the appellant’s contention that their purchase price was a fully commercial price. It is well settled [Eicher Tractors Ltd. v. CC, Mumbai reported in 2000 (122) E.L.T. 321 (S.C.)] that unless warranted by the exceptions provided in Rule 4 of Customs Valuation Rules, transaction value should be accepted as assessable value. This position holds good in the case of valuation of second-hand/used goods also. In the present case, no specific reason in terms of Rule 4 has been relied upon by the Customs authorities for the rejection of the transaction value. Price information available supports the transaction value. In these facts and circumstances, we are of the view that enhancement of the value for the purpose of assessment was not justified. The transaction value was required to be accepted for assessment and for clearance of the goods.
6. In the view we have taken above, the appeal succeeds and is allowed after setting aside the impugned order.