Customs valuation of second-hand machinery cannot rest on substituting one engineer's opinion for another without proper basis.

Declared transaction value for imported second-hand machinery could be rejected only on cogent grounds consistent with Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 2007. In the absence of any allegation of related party dealings or other disqualifying circumstance under Rule 3(2), and where the load port chartered engineer's certificate contained operational testing and detailed findings, rejection of that certificate in favour of an unexplained local certificate was merely substitution of one expert opinion for another. The declared transaction value had to be accepted for assessment.

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Issues: Whether the rejection of the load port chartered engineer's certificate and the consequent redetermination of the value of the imported second-hand machinery on the basis of the local approved chartered engineer's certificate under the Customs Valuation Rules, 2007 was sustainable.

Analysis: The declared transaction value could be rejected only on cogent grounds consistent with Section 14 of the Customs Act, 1962 and the valuation rules. The record showed no allegation that the importer and foreign supplier were related or that any disqualifying circumstance under Rule 3(2) of the Customs Valuation Rules, 2007 existed. The local chartered engineer's certificate did not disclose the specific basis for the valuation adopted, whereas the load port certificate recorded operational testing and detailed findings. In these circumstances, rejection of the load port certificate amounted to mere substitution of one expert opinion for another without an independent basis. The Board circular on second-hand machinery also indicated that the local certificate is to be accepted only where a proper load port certificate is absent, which was not the case here.

Conclusion: The rejection of the load port certificate and the redetermination of value were unsustainable, and the declared transaction value was required to be accepted for assessment.

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