ORDER
Jeet Ram Kait, Member (T)
1. This appeal is directed against Order-in-Original No. 628/2003 dated 2.5.2003, by which the Ld. Commissioner has enhanced the assessable value of US $ 75,000 from the declared value of US $ 60,000 CIF. He has also confiscated the goods under Section 111(d) of the Customs Act, 1962. However, he allowed the importers an option to redeem the goods on payment of fine of Rs. 10,80,000 under Section 125 of the Customs Act, 1962. He has also imposed a penalty of Rs. 5,40,000 under Section 112(a) of the Customs Act, 1962.
2. Aggrieved by this order the appellants have come in appeal on the ground that the Commissioner has not rejected the transaction value in the impugned order and has not given any reasons for jacking up the price to US $ 75,000. They therefore submitted that the enhancement of value is in violation of Rule 4(2) of the Customs Valuation Rules, 1988. They also prayed that direction be issued to the respondent-Commissioner to re-fix the value accepting the invoice value as the basis of assessment and also for allowing abatement of duty on the basis of the findings of the insurance agency, which the appellant is expecting to receive shortly. They further submitted that the respondent-Commissioner has failed to quantify the extent of damage as per Section 22(2) of the Act. The Indian Chartered Engineer has taken US $ 2,06,500 as the value of the machine in the year of manufacture but he put the assessable value (CIF) as US $ 75,000. He has not taken into account the fact that 70% depreciation was due to be abated for arriving at the assessable value. The depreciated value will be US $ 61,950 whereas the transaction value as reflected in the invoice is US $ 60,000. Therefore, the certificate issued by the Indian Chartered Engineer is fully in favour of the appellant, the difference being marginal and hence there was no reason for rejecting the declared value. The Indian Chartered Engineer is not sure about the year of manufacture but only says “appears to be more than 10 years old” and has fixed the price at US $ 75,000. Even if the full depreciation (70%) is allowed on the original price, the net price should have come to US $ 61,950. He also submitted that seven year old machine is eligible for 70% depreciation and since the machinery under import is taken as more than ten years old by the respondent-Commissioner and since there was no reconditioning, the Indian Chartered Engineer should have recommended the acceptance of the declared value. They further submitted that the machinery under import as per the Chartered Engineer’s certificate had certified that the “4 head unit had suffered a major damage in transit resulting in damaged container and impact received, parts necessitating major reconditioning, etc. Therefore, the extent of damage is substantial and this should have been quantified for the purpose of abatement of duty in accordance with the ratio prescribed under Section 22(2) of the Customs Act. They also relied on the judgment rendered in the case of Collector of Customs, Madras v. Sundaram Fasteners Ltd., 1996 (86) ELT 49 (T), wherein it was held that the goods damaged was examined by the Assistant Collector on request of importer but value of the damaged goods was not appraised. In that case independent survey was arranged by the importer, but notice was not given to the Assistant Collector. The Hon’ble Tribunal had ordered that the Surveyor’s report has to be accepted as true and reasonable in the absence of any suggestion of manipulation or collusion therein and also in the absence of any technical opinion obtained by the department to challenge the report.
3. Appearing on behalf of the appellant Shri R. Ganesan, Adv. has reiterated the above submissions and further argued that there is no clear evidence to hold that the machine is more than ten years old and he wanted the Hon’ble Tribunal to extend the benefit of doubt to the appellant in the matter of age of the machine and considering the fact that the appellant is the actual user, the charge of violation of EXIM policy of importing a machine of more than ten years old may kindly be set aside. He therefore requested the order of confiscation and imposition of fine is unwarranted and he therefore prayed that the order of confiscation and imposition of fine and penalty may be set aside.
4. Appearing on behalf of the revenue Shri C. Mani, DR invited our attention to the finding recorded by the Commissioner wherein stating that the Chartered Engineer namely M/s. Superintendence Company of India (Private) Limited have carried out physical examination of the machine and has given a report dated 2.5.2003 stating that the age of the machine appears to be more than ten years old. The Commissioner further records in this finding that the importer had stated in the letter dated 6.5.2003 that the matter requires adjudication as the machine is marginally more than ten years old and so there is no misdeclaration on their part. Besides it has been stated by the importers in their letter dated 6.5.2003 that the Indian Chartered Engineer has stated — vide comments (3) that the 4 head unit has suffered major damage, which calls for major reconditioning. The Ld. DR also invited our attention to the findings recorded in para 3 wherein the importers have stated in their letter dated 6.5.2003 that they accept the value of US $ 75,000 as recommended by the Indian Chartered Engineer for the purpose of adjudication and assessment. Therefore, they had never challenged the value. They only pleaded for a leniency in the matter keeping in view the heavy damage to the machine caused during transit and the demurrage incurred so far and the fact that they are actual users. He therefore submitted that the appellants do not have any case and their appeal is required to be rejected.
5. We have considered the submissions made by both the sides and we find that the importers vide their letter dated 6.5.2003 and as per the recordings by the Commissioner have accepted by value of US $ 75,000 CIF as recommended by the Indian Chartered Engineer for the purpose of adjudication and assessment and they had only requested that a lenient view in the matter taking in view that damage views caused to the machine during transit and the heavy demurrage incurred by them and the fact that they are the actual users or the machine. Therefore, as regards, the value, the value of US $ 75,000 CIF has been accepted by them and there was no dispute on this value before the adjudicating authority. As regards the confiscation, since the goods were more than ten years old and have been imported without a specific import licence they are liable for confiscation under Section 111(d) of the Customs Act read with Section 3(3) of Foreign Trade Development Regulation Act, 1992 and the importers are also liable for penalty under Section 112(a) of the Customs Act. However, keeping in view the overall facts and circumstances of the case, as pleaded by the appellants and the recording by the Ld. Commissioner we reduce the redemption fine from Rs. 10.80 lakhs to Rs. 7.00 lakhs and reduce the penalty from Rs. 5.40 lakhs to Rs. 2.50 lakhs. But for the above modification, the appeal is otherwise rejected. Ordered accordingly.
