Valuation of imported second-hand machinery upheld on 70% depreciation basis; confiscation sustained, but fine and penalty reduced.

Enhancement of the value of an imported second-hand machine was upheld where valuation was based on the SGS certificate after allowing 70% depreciation, treated as the maximum permissible under Circular No. 495/16/93-Cus. The importer's reliance on circulars permitting 90% depreciation failed because those circulars applied to de-bonding of capital goods from EOU/EPZ units and not to this import. Confiscation of the machine was sustained, but the redemption fine and personal penalty were found excessive for the actual users and were reduced.

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Issues: Whether the enhancement of the value of the imported second-hand machine and the consequential confiscation, redemption fine and personal penalty were justified.

Analysis: The import of the second-hand machine was admittedly unauthorised, and the enhancement of value was made on the basis of the SGS certificate after allowing 70% depreciation from the original value. The depreciation so allowed was treated as the maximum permissible under Circular No. 495/16/93-Cus. The circulars relied on by the importer concerning 90% depreciation were found inapplicable, as they dealt with de-bonding of capital goods from EOU/EPZ units and not with the present import. The valuation adopted by the Commissioner was therefore upheld. The confiscation was also sustained, though the appellants being actual users, the quantum of redemption fine and penalty was considered excessive.

Conclusion: The enhancement of value and confiscation were upheld, but the redemption fine and personal penalty were reduced.

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