Customs valuation must match the evidence: unsupported enhancement and mis-declaration fine cannot survive once declared value is accepted.

An enhanced customs valuation based on best judgment must rest on a correct and reasonable reading of the evidence; here, the material did not support fixing the assessable value of the imported second-hand machines at Swiss Francs 63,500 per machine, so the enhancement was unsustainable. Once the declared invoice value was accepted, the foundation for alleging mis-declaration or under-valuation disappeared, and the fine imposed in lieu of confiscation under Section 111(m) of the Customs Act, 1962 could not survive. The revisional order was therefore set aside, with relief also extending to refund of amounts collected on that basis.

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Issues: (i) Whether the enhanced assessable value of the imported machines at Swiss Francs 63,500 per machine was sustainable on the material relied upon by the revisional authority; (ii) Whether the finding of mis-declaration and the fine imposed in lieu of confiscation under Section 111(m) of the Customs Act, 1962 could stand.

Issue (i): Whether the enhanced assessable value of the imported machines at Swiss Francs 63,500 per machine was sustainable on the material relied upon by the revisional authority.

Analysis: The material showed that the machines imported were second-hand SPM 18 machines and that the Departmental letters and telegram did not justify the inference that the value of a reconditioned machine was the value of the second-hand machine plus an equal amount for reconditioning. The evidence relied upon by the Department was read as indicating that reconditioned SPM 18 machines in good condition could fetch a range of prices, but not that the assessable value per machine was Swiss Francs 63,500. The revisional authority, therefore, proceeded on an erroneous reading of the evidence.

Conclusion: The enhancement of the assessable value to Swiss Francs 63,500 per machine was unsustainable and was set aside in favour of the assessee.

Issue (ii): Whether the finding of mis-declaration and the fine imposed in lieu of confiscation under Section 111(m) of the Customs Act, 1962 could stand.

Analysis: Once the declared invoice value was accepted as correct, the foundation for holding that there was mis-declaration or under-valuation for customs duty purposes disappeared. The consequential fine imposed in lieu of confiscation could not survive when the enhanced valuation itself was found unsustainable.

Conclusion: The finding of mis-declaration and the fine imposed in lieu of confiscation under Section 111(m) of the Customs Act, 1962 were set aside in favour of the assessee.

Final Conclusion: The impugned revisional order could not be sustained, and the petitioners obtained relief against both the enhanced valuation and the consequential penalty consequences, with refund directed of the amounts collected on that basis.

Ratio Decidendi: A valuation adopted on best judgment must rest on a correct and reasonable reading of the evidence; where the material does not support the enhanced figure, both the enhancement and consequential penal action for mis-declaration cannot be sustained.

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