ORDER
C.N.B. Nair, Member (T)
1. Heard both sides and perused the record.
2. The dispute raised in this appeal of the Revenue is about the assessable value of a 1993 model Rollo Royce car imported by the Respondent.
3. The car arrived in India in 1996 and the Bill of entry was filed on 3.8.1996. Dispute arose about the validity of import license produced by the Appellant. That and other disputes delayed the clearance of the car till 28th March, 2005.
4. The car was purchased by the Appellant at a price of £ 75,000 from a German party, namely M/s. Shone Fab Collection, Germany. The Deputy Commissioner rejected the sale price as basis for value on the ground that “the supplier does not appear to be dealing in second-hand car”. Therefore, value was determined going by the catalogue price after granting a depreciation of 38% from the catalogue prices.
5. The respondent challenged the above order of valuation before Commissioner (Appeals). The Commissioner allowed the appeal. He noted that the rejection of the transaction value was incorrect in as much as the finding that the supplier was not a dealer was without any factual basis. He also noticed that Hs. R. Owen, distributor of the car, has certified that the price of the car after excluding VAT and manufacturer’s discount was about £ 1.25 lakhs in 1993. The Commissioner took the view that this certificate of the distributor supported the commercial nature of transaction value. It was in the light of such a factual finding about the commercial nature of the price and the judgment of the Supreme Court in that case of Eicher Tractor Ltd. 2000 (122) E.L.T. 321 (S.C.) that the Commissioner held that “the invoice value has to be accepted.
6. The Commissioner’s finding about valuations did not stop with the acceptability of the transaction value. He went on to consider whether the depreciation allowed by the original authority was adequate. In view of the fact that the car was held up for about 9 years in the Custom before its clearance, the Commissioner held that the depreciation of 38% allowed was insufficient and a depreciation of 50% was to be allowed.
7. Revenue’s appeal seek restorations of the adjudication order. Its contention is that second-hand cars are not normally sold in international trade and therefore transaction value is not to be accepted. It has also been pointed out that the practice in the Custom Department, based on circulars of the Board (dated 19.11.1987 and 26.11.1993), is to carry out valuation based on catalogue price after allowing proper depreciation.
8. But their main grievance is about the depreciation allowed. It is being pointed out that the order of the Commissioner is illegal in as much as Section 14 of the Custom Act stipulates that value shall be with reference to “price at the time of importation.” The Learned SDR has emphasized that any depreciation after the importation of goods, for whatever reason, would be wholly illegal and cannot be allowed.
9. The Learned Council for the Appellant submits that the Commissioner was right in granting the higher depreciation. He has contended that the observations of the Commissioner on the factual aspects of the matter are entirely correct and sound, in as much as the car had suffered greatly in value during the long period of detention. He has also pointed out that the detention was totally unjustified and was on frivolous grounds. He has taken us through several decisions of the Tribunal in support of the contention that high percentage ofdepreciation is justified in cases involving fast depreciating goods (electronics).
10. Undoubted, the Commissioner’s finding about the transaction value is fully justified. The car was purchased from an unrelated person and commercial nature of the price remains supported by the facts reported by the distributor of the car in question. When the commercial nature of the price is borne out by the fact that the purchase price is within a close range of the depreciated value there is no legal justification to reject the transaction value. The Commissioner is also right in his observation that transaction value is the basis for value prescribed in Rule 4 of the Customs Valuation Rules and variation from transaction value should be the exception and that exception is applicable only in the types of cases stated in Rule 4 itself. The Commissioner’s order on assessment based on transaction value is also in conformity with the ruling of the Hon’ble Supreme Court in the case of Eicher Tractors. The Revenue’s present contention that second-hand car is not sold in international trade is totally baseless. This transaction itself is sufficient to disprove it. It is also known that many people returning to India, purchase second-hand cars and bring them to India. There is nothing in the Customs valuation law forbidding the acceptance of purchase price of second-hand car for the purpose of valuation for custom duty. In these circumstances, we are not able to find any merit in the appeal of the Revenue on this ground.
11. Coming to the next ground, the Revenue is entirely right in its contention that value must be based on the price at time of import of the goods. This is specified in Section 14 on the Custom Act. Time of import and place of import are invariably the basis for tariff value, rate of duty and exchange rate. Therefore, the finding on depreciation is contrary to the basic statutory provisions in regard to a vide range of matters. The Revenue is, therefore, right in its contention that Commissioner is legally in error in holding that a higher depreciation be granted, taking into account to the long period of delay in Customs clearance. Certainly delay in clearance has affected the value of the car. But, the law does not provide for post import depreciation. And a hard case should not make bad law.
Therefore, we set aside the Commissioner’s finding in regard to depreciation.
12. In the result, it is ordered that the car be assessed to duty based on its transaction value and duty collected.
(Dictated and pronounced in the open Court)