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Issues: (i) whether the declared value of the imported second-hand printing machines could be rejected and enhanced on the basis of a solitary comparable import; (ii) whether the goods were covered by the Open General Licence under the relevant import policy.
Issue (i): whether the declared value of the imported second-hand printing machines could be rejected and enhanced on the basis of a solitary comparable import.
Analysis: The burden of proving under-invoicing lay on the Department. Before discarding the declared value, the authorities were required to make proper enquiries and collect adequate material. The valuation adopted by the Collector was based on one isolated instance of another import, although the goods were not comparable in all respects, and the record did not contain sufficient reliable evidence to displace the invoice value. The Court found that valuation of second-hand machinery with differing age, residual life, source and condition is inherently difficult, and that the evidence adduced did not justify rejection of the appellants' declared value.
Conclusion: The enhancement of value was not sustainable, and the declared value was to be accepted.
Issue (ii): whether the goods were covered by the Open General Licence under the relevant import policy.
Analysis: The saving clause in the import policy permitted shipment up to the extended date where there was a firm contract entered into by 28-2-1983, the contract was registered with the bank, and shipment was made by 31-3-1984. The goods were imported by an actual user and shipped within time. An irrevocable letter of credit had been opened on 28-2-1983, which supported the existence of a firm contract. The condition relating to inspection did not negate the concluded nature of the contract. The finding that the import was not entitled to OGL could not therefore stand.
Conclusion: The import was eligible under OGL and confiscation was unjustified.
Final Conclusion: The appeal was allowed on both valuation and import-policy eligibility, and the appellants obtained relief against confiscation and enhancement of assessable value.
Ratio Decidendi: In customs valuation, the declared value cannot be displaced without cogent evidence of under-invoicing, and an irrevocable letter of credit coupled with timely shipment may establish a firm contract for OGL eligibility under the relevant import policy.
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