2013 (3) TMI 597 - AT - Customs

Importer Prevails as Tribunal Rules No Contravention of Exim Policy

AUTO FORGING (INDIA) Versus COMMISSIONER OF CUSTOMS, KANDLA

AUTO FORGING (INDIA) Versus COMMISSIONER OF CUSTOMS, KANDLA - 2014 (311) E.L.T. 328 (Tri. - Ahmd.) Issues Involved:1. Validity of the expert committee's opinion on the age of the imported machines.2. Legitimacy of the enhancement of the value of the imported machines.3. Rejection of the Chartered Engineer's opinion submitted by the importer.4. Validity of the original value of the machines indicated in EURO.5. Justification for the confiscation of the machines.6. Imposition of penalty on the importer.Issue-wise Detailed Analysis:1. Validity of the Expert Committee's Opinion on the Age of the Imported Machines:The dispute centered on the import of three old and used machines, which the Revenue claimed were more than 15 to 20 years old, thus violating the Exim Policy 2002-2007 as they required a license for import. The customs authorities, upon physical examination, found discrepancies in the machines' age, such as old motors dated 1979 and 1981. The local Chief Engineer's report supported these findings. The Joint Commissioner upheld the confiscation based on these examinations. The Commissioner (Appeals) also relied on the expert committee's report and rejected the foreign supplier's Chief Engineer's certificate. The Tribunal found that the import documents were not convincingly rebutted by the Revenue, and thus, there was no contravention of the Exim policy justifying confiscation and penalty.2. Legitimacy of the Enhancement of the Value of the Imported Machines:The appellant declared a CIF value of Rs. 10,68,780/-, which the authorities rejected, directing payment of duty on an enhanced value. However, the Joint Commissioner did not specify the enhanced value in the order. The Commissioner (Appeals) did not provide evidence to show that the invoice value was incorrect. The Tribunal noted that the Assistant Commissioner did not quantify the enhanced value and found no reason for payment of duty on an unspecified enhanced value. The valuation aspect was not adequately discussed, and the Tribunal upheld the payment of duty on the invoice price.3. Rejection of the Chartered Engineer's Opinion Submitted by the Importer:The Commissioner (Appeals) rejected the Chief Engineer's certificate from the foreign supplier, citing lack of technical literature, supporting documents, and the certificate being from an engineer in England for machines exported from Germany. The Tribunal agreed that the reasons for rejecting the foreign certificate were equally applicable to the local expert's report, which was based on visual examination without technical literature or market survey. Thus, the Tribunal found the foreign certificate more credible.4. Validity of the Original Value of the Machines Indicated in EURO:The Chartered Engineer's certificate indicated the original price of the machines in EURO, which the Commissioner (Appeals) found suspicious as EURO was introduced later. The Tribunal noted that the certificate was issued in 2004 when EURO was in existence and found no reason to doubt the certificate based on the currency used.5. Justification for the Confiscation of the Machines:The Joint Commissioner ordered the confiscation of the machines under Section 111(d), (f), and (m) of the Customs Act, 1962, with an option to redeem them upon payment of a fine and duty on the enhanced value. The Tribunal found that the import documents were not convincingly rebutted by the Revenue and that there was no contravention of the Exim policy justifying confiscation. The Tribunal set aside the confiscation order.6. Imposition of Penalty on the Importer:A penalty of Rs. 1,50,000/- was imposed on the importer under Section 112 of the Customs Act, 1962. The Tribunal, finding no contravention of the Exim policy and no adequate evidence for undervaluation, set aside the penalty imposed on the importer.Separate Judgments:The case saw differing opinions among the members of the Tribunal. The Member (Judicial) found no justification for confiscation and penalty, while the Member (Technical) upheld the expert committee's findings and the penalty. The third member, Member (Judicial), agreed with the Member (Judicial) on the valuation issue but sided with the Member (Technical) on other points, leading to a majority order. The final order upheld the confiscation and penalty but set aside the enhancement of the assessable value.