Declared value of second-hand machinery cannot be rejected without cogent evidence; unsupported enhancement of age and value fails

Declared transaction value of imported second-hand machinery should not be rejected, and its value or age should not be enhanced, without cogent contrary evidence. The commentary notes that reliance on a locally obtained chartered engineer's certificate, where a foreign chartered engineer's certificate supported the declared age and market value, was not a proper basis for rejecting the invoice value. On that reasoning, confiscation, redemption fine and penalty based on the enhanced valuation could not be sustained, and consequential relief followed for the importer.

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Issues: Whether the declared transaction value of imported second-hand machinery could be rejected and the value and age of the machinery could be enhanced on the basis of a local chartered engineer's certificate, leading to confiscation, redemption fine and penalty.

Analysis: The dispute related to import of second-hand machinery, where the authorities rejected the invoice value and relied on a locally obtained chartered engineer's certificate to hold that the machinery was more than 10 years old and to enhance the value. The assessee produced a foreign chartered engineer's certificate showing that the machinery was less than 10 years old and supported the declared market value. In the light of the settled principle applied in prior decisions that the transaction value of second-hand machinery cannot be rejected without proper basis, and that unsupported enhancement of value and age is not sustainable, the rejection of the declared value and the acceptance of the local certificate were found unjustified.

Conclusion: The rejection of the transaction value and the enhancement of value and age were not sustainable; the appeal was allowed in favour of the assessee.

Final Conclusion: The confiscation, redemption fine and penalty based on rejection of the declared value of the second-hand machinery could not stand, and the assessee obtained consequential relief.

Ratio Decidendi: The declared transaction value of second-hand machinery cannot be rejected, and its value or age cannot be enhanced, in the absence of cogent contrary evidence.

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