ORDER
U.L. Bhat, J. (President)
1. This appeal is directed against order-in-original No. ACU/DS/1/98 dated 7.1.1998 passed by Commissioner of Customs (Air Cargo), New Customs House, New Delhi confiscating the Toyota Land Cruiser imported by the appellant under the Transfer of Residence Rules, 1978 with option to redeem on payment of fine of Rs. 10 lakhs, determining the assessable value of the car at Rs. 12,15,527.50 and demanding duty on that basis and imposing penalty of Rs. 5 lakhs under Section 112 of the Customs Act, 1962.
2. Appellant was working in UAE since about 1987. He returned to India for good in 1997. During the interregnum, he was working in UAE as a Teacher. He filed bill of entry dated 13.6.1997 declaring the assessable value of the car as Rs. 8,01,945.77 and sought clearance of the vehicle under the Transfer of Residence Rules. Appellant produced registration certificate showing that the car was purchased on 26.2.1996 from M/s. Kampala Used Cars of UAE for 73,000 Dirhams. The certificate did not disclose the engine number. Officers of the Customs House traced the engine number and obtained particulars from the Delhi Office of the manufacturer of the vehicle. The Delhi Office informed the Customs House that the particular vehicle was manufactured in the factory at Toyota in Japan on 16.10.1996 and the ex-factory domestic price was 29,98,000 Yen. On this basis, the Customs House came to the tentative conclusion that appellant could not have used the vehicle for the period of at least one year in UAE as required under the public Notice No. 3/97 of the Ministry of Commerce, Government of India and therefore, the import was illegal. Adopting the price disclosed by the Delhi office of the manufacturer, the Customs House arrived at the assessable value as Rs. 12,15,527.50 and came to the tentative conclusion that there was mis-declaration of the value also. Accordingly, show cause notice was issued proposing confiscation of the vehicle, determination of the assessable value on the above basis and imposition of penalty. Though appellant resisted the notice, the Commissioner passed the impugned order as indicated above. This order is now challenged.
3. Earned Counsel for the appellant confined his submissions to the correctness of the assessable value determined by the Commissioner, quantification of the redemption fine and penalty.
4. It is pointed out that the price on the basis of which assessable value was determined was the ex-factory domestic price in Japan and the same could not be adopted without giving the proper adjustment, in order to arrive at the price in international trade for import at the time and place of the present import. Earned Counsel contended that in the circumstances, it is necessary to give adjustment by way of adoption of element of VAT, trade discount by 15% as also depreciation. Reference is made to decisions of various authorities under the Customs Act granting deduction on account of element of VAT. According to Shri Mohmmed Ali, JDR, this could be done only if VAT was prevailing in the country of manufacture. It is for verification whether the VAT prevailed in UAE in February, 1997. We are also of the opinion that the claim of deduction of 15% as trade discount would be valid though the price adjusted is not the world catalogue price. On the question of depreciation, reference is made to the instructions issued by the CBEC suggesting depreciation for used cars at 4% for every quarter during the first year, 3% for every quarter during second year etc. Considering the date of manufacture and the date of possible purchase, we are of the opinion that depreciation of 4% should be deducted in arriving at the assessable value.
5. On the question of quantification of redemption fine and penalty, earned Counsel contended that in an identical situation, the Additional Commissioner of Customs, Bombay quantified redemption fine as Rs. 2.5 lakhs and quantified penalty as Rs. 1 lakh. Earned Counsel also contended that at about the time of import, the market price of such a car in India would not have been more than Rs. 23 lakhs and this is a circumstance which should have been taken into consideration in quantifying the fine and penalty. Since the valuation aspect has to be determined afresh after making enquiries about VAT and giving deduction on account of trade discount and depreciation, we are of the opinion that quantification of fine and penalty may also be done afresh after taking into consideration all relevant aspects, including the aspects referred to by earned Counsel for the appellant.
6. For the reasons indicated above, we set aside the impugned order and remand the case to the jurisdictional Adjudicating Authority for passing a fresh order in accordance with law and the findings and directions in this order and after giving the appellant an opportunity of hearing. The appeal is allowed in this manner.
(Pronounced and dictated in the open Court).