Customs valuation of second-hand imports: reconditioning cost cannot be deducted from assessable value of goods as imported.

Customs valuation of second-hand imported photocopier machines may be based on a chartered engineer's report where the report is supported by relevant factors such as model, year of manufacture, condition, residual life and market comparison. A deduction for post-import reconditioning cost, however, is not permissible when valuing the goods in the condition in which they were imported. The declared value was not accepted on the evidence, and the higher competing report was also rejected for want of cogent basis. Duty, fine and penalty were therefore to be re-quantified on the basis of the first inspection report without any reconditioning deduction.

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Issues: Whether the declared value of the imported second-hand photocopier machines could be rejected and the assessable value determined on the basis of the first chartered engineer's report, and whether any deduction could be allowed towards post-import reconditioning cost.

Analysis: The goods were imported as used photocopier machines and the valuation dispute turned on competing inspection reports. The first report assessed the value on relevant factors such as model, year of manufacture, condition, residual life and market comparison, but it wrongly deducted an estimated reconditioning cost while arriving at the value of goods in the condition in which they were imported. The second report was not preferred because there was no cogent basis to discard the first report and no material justified adoption of the higher valuation in the second report. The declared value was also not accepted because the evidence on record substantially supported rejection of that value.

Conclusion: The assessable value was to be determined on the basis of the first inspection report, but without allowing any deduction towards reconditioning cost; the second report and the declared value were not accepted.

Final Conclusion: The valuation dispute was settled by directing fresh quantification of duty, fine and penalty on the basis of the first chartered engineer's valuation, with the remand modified accordingly.

Ratio Decidendi: In customs valuation of second-hand goods, a valuation report may be accepted if supported by relevant factors, but any deduction for post-import reconditioning from the value of goods as imported is impermissible.

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