Used machinery valuation and import licence compliance: transaction value rejection and confiscation upheld for prohibited imports.

In imports of used machinery, the declared transaction value may be rejected where the prescribed load-port inspection or overseas Chartered Engineer certification is absent and the available valuation material, including appraisement and depreciation data, creates doubt about the declared price; the re-determined assessable value was therefore upheld. Goods imported without prior permission from the Ministry of Environment and Forests and without the required import licence, contrary to the Foreign Trade Policy, were treated as prohibited goods; confiscation, redemption fine and penalty were sustained. The appeals failed in full.

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Issues: (i) Whether the declared transaction value of the imported used machinery could be rejected and re-determined on the basis of Chartered Engineer certificates and related import valuation norms; (ii) whether the goods, imported without the required licence and permissions, were liable to be treated as prohibited goods and confiscated.

Issue (i): Whether the declared transaction value of the imported used machinery could be rejected and re-determined on the basis of Chartered Engineer certificates and related import valuation norms.

Analysis: The imports were of second-hand machinery, but no load-port inspection or appraisement report from an overseas Chartered Engineer accompanied the goods as contemplated by Circular No. 25/2015-Cus. The absence of such certification, together with the material on record showing higher appraised values and improper application of depreciation, furnished sufficient grounds to doubt the declared value. The lower authorities were therefore justified in rejecting the transaction value and re-determining assessable value on the basis of the available Chartered Engineer material.

Conclusion: The rejection of the declared value and the re-determination of value were upheld.

Issue (ii): Whether the goods, imported without the required licence and permissions, were liable to be treated as prohibited goods and confiscated.

Analysis: The goods were imported without prior permission from the Ministry of Environment and Forests and without the requisite import licence, contrary to para 2.3 of the Foreign Trade Policy 2015-2020. In those circumstances, the goods were held to be of prohibited nature, and the confiscation ordered by the authorities was sustained.

Conclusion: The goods were held to be prohibited goods and the confiscation was upheld.

Final Conclusion: The appeals failed, and the impugned order confirming valuation, confiscation, redemption fine, and penalty was sustained in full.

Ratio Decidendi: In the case of used imported machinery, non-production of the prescribed load-port inspection certificate can justify rejection of the declared transaction value, and import without the required statutory permissions under the Foreign Trade Policy renders the goods liable to confiscation as prohibited goods.

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