ORDER
T.P. Nambiar, Member (T)
1. This is an appeal filed by the department against the orders passed by the Commissioner (Appeals). In the impugned order, he held that the transaction value is admissible.
2. In order to appreciate both sides arguments, we reproduce para 8 of his order which reads as under :-
8. I have gone through the facts of the case and considered the issue in detail. In my opinion the lower authority has invoked Rule 6 of Valuation Rules, 1988 without properly ruling out Rule 4 of the same rules. According to Valuation Rules, 1988, Rule 6 would be relevant only when application of Rule 4 is ruled out. There is no material in Assistant Collector’s order to show that Rule 4 is not invokable in the present case. The lower authority has not pointed out any valid ground which would disqualify the impugned goods from the purview of Rule 4 of Valuation rules. The lower authority is reasoning that because of the apparent error in the Chartered Engineer’s Certificate while indicating the value of goods at the time of manufacturing, the invoice value cannot be taken as ‘Transaction Value’ has no force at all and further it is not supported by the Valuation Rules, 1988. According to Valuation Rules, 1988 it cannot be a ground for rejection of Transaction Value under Rule 4. Further the appellant’s argument about the other goods imported much earlier and as such not satisfying the requirement of Section 14(1) has some force. Admittedly, the imports on which the lower authority has placed his reliance for enhancement are not contemporaneous hence the conditions laid down under Section 14(1) are not satisfied. Moreover, Valuation of secondhand machinery would be on its extent of (sic) also. A machine may be of earlier years but if it has not suffered much wear and tear its price would be higher than the machine of later year if it has been used more extensively than the older one. Hence the intensity of use is also an important criterion apart from the period of use or age of the machine to arrive at the condition and value of the secondhand machine.
There is nothing on record to show that the goods under question are comparable in the above respect also. The appellants are relying upon my earlier decision in a similar case (C3/299/91) in which I have held that the invoice value should be accepted as transaction value in terms of Rule 4 of the Valuation Rules. There is no material on record in this case to take a contrary view. Accordingly, I hold that the invoice value should be accepted for assessment purposes. The impugned order of the lower authority is set aside and the appeal allowed.
3. The department in their appeal grounds has mentioned as follows :-
“4. The Rule 4 of Customs Valuation (Determination of Price of Imported Goods), Rules, 1988 reads as under :
4. Transation Value : (1) The transaction value of imported goods shall be
the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules.
(2) The transaction value of imported goods under Sub-rule (1) above shall be accepted; provided that –
(a)
(i)
(ii)
(iii)
(b) the sale or price is not subject to some condition or consideraion for which a value cannot be determined in respect of the goods being valued.
The machine under reference was a 1984 model Komori Kony 4 color offset printing machine L 437 size : 660 x 1000 mm with new transformer by declaring a value of US $ 35,000 (CIF) and imported in the year 1989. Similar goods imports were noticed at a much higher price at or about the same period and the details are as follows :
__________________________________________________________
Invoice No. Model of Machine Year of CIF Value
Manufacture (US$)
__________________________________________________________
HK 51, dated Komori Make 1982 55,000/-
17-2-1988 Newkony Model L437,
Paper Size 660 x 1000
mm
HK 67, dated Komori Make 55,000/-
20-1-1989 Newkony L-437
Model
89007, dated Komori Make Kony 1983 55,000/-
15-5-1989
Model L-437
B.E.No. 20206,
dated 12-4-1989
__________________________________________________________
From the above, it can be seen that many secondhand machines of Komori Make Newkony Model L-437 (similar to the one imported by importer in the instant case) had been imported through Madras for a value of US $ 55,000/- irrespective of the year of manufacture, that is, machines manufactured in 1982 and 1983 were also imported after 6 years of usage at a price of US $ 55,000/- whereas in the instant case, the importers have given invoice only for US $ 35,000/- for a later make and only 5 years of usage (year of manufacture; 1984). In the third case mentioned above (year manufacture; 1983) as has been stated in the earlier Order-in-Original dated 6-3-1990 the value of the Press at the time of manufacture (i.e., in 1983) was given as US $ 98,000/- but in the subject case, the value of the Press during 1984 has been declared as US $ 85,000/-. The price of press during 1984 logically should be more than the price which was ruling in 1983.
From the above, it could be seen that the price is subject to some condition (or) consideration viz; the second hand nature which itself influenced the pricing of the subject goods, for which the value cannot be determined.
Therefore, the transaction value under Rule 4 is ruled out. No identical goods imports were noticed. Hence Rule 5 cannot be applied.
The goods imported were assessed under Rule 6 of the Valuation Rules. In this case, the valuation done was akin to the valuation under Rule 8 by using reasonable means consistent with the Principles and general provisions of these rules and Sub-section (1) of the Section 14 of the Customs Act, 1962 and on the basis of data available in India by flexible interpretation of the 90 days requirement.
Under these circumstances, the Collector (Appeals) observation that there was no material on record in this case to reject the transaction value is therefore cannot be accepted. The valuation is done based on the goods imported at or about the same period, and the 90 days requirment had been administered flexibly.
The earlier case cited in the Order-in-Appeal by Collector (Appeals) is different from this case, since in the earlier case the valuation was done by adoption of the depreciated value, whereas in this case the valuation of goods was done based on the contemporaneous import prices noticed at or about the same period. The earlier decisions by Collector (Appeals) therefore cannot be applied in this case.
Therefore, the Collector (Appeals) order cannot be accepted.”
4. The ld. SDR Shri R. Victor Thiagaraj stated that the ld. Collector has in the impugned order mentioned that valuation of secondhand machinery would be of its extent of use. He also drew our attention to the observation of the Collector (Appeals) wherein he stated that a machine may be of earlier years but if it has not suffered much wear and tear its price would be higher than the machine of later year if it has been used more extensively than the older one. He also stated that the intensity of use is also an important criterion for arriving at the machine value. The ld. SDR pointed out that without these particulars available before the Collector (Appeals), he could not have allowed the appeal on assumption that the imported goods are used extensively more than the earlier models which were imported.
5. The ld. Accountant of the respondents is present and he reiterated the written arguments.
6. We have considerd the submissions. We find from the original authority’s order that he has passed his order on the grond that earlier models of the machine were imported for US $ 55,000/-. These models are 1982 and 1983 but the present machine is of the make 1984. The declared value is US $ 35,000/-. This prima facie evidence itself is sufficient to hold that the value declared is not accepted. If that is so, it was for the Collector (Appeals) to have discussed the order of the adjudicating authority to find out whether the fixation of the price by the adjudicting authority was taken on the available evidence on record. He has not specifically dealt with the adjudicating authority’s reasoning to hold as to why it is not sustainable. On the contrary, he merely assumed that the value of the machine is to be fixed on the extent of use. But there is no evidence available before him or neither he has discussed any evidence in this regard to hold that the machine imported by the respondents were used extensively more than earlier models which were 1982 & 1983 models. In the absence of any such definite evidence before him, he could not have allowed the appeal on mere presumptions. He should have discussed the reasoning of the adjudicating authority and should have come to the conclusion as to why those reasons are not acceptable to him. In the result, we are of the view that the impugned order is not sustainable as it is based on presumptions and we set aside the same and remand the matter to the Collector (Appeals) for de novo hearing after granting a personal hearing to the respondents and then to pass an order by dealing with the specific grounds which are taken by the adjudicating authority and then giving his reasoning whether it would be accepted and if the same is not acceptable, he should give his reason as to why it could not accepted and he should pass a speaking order in this behalf based on evidences which are available on record.
7. The appeal is allowed by remand.