2026 (3) TMI 1387 - AT - Customs

Customs valuation of second-hand machinery cannot rest solely on a local certificate when a valid Load Port certificate exists.

Declared value of imported second-hand machinery cannot be rejected under customs valuation principles without a legally sustainable basis, as transaction ... Valuation of second-hand imported machinery - Transaction value - Load Port Chartered Engineer's certificate - Redetermination of Value - Whether the declared value of the imported second hand machines was rightly enhanced based solely on the Chartered Engineer’s Certificate ?. Valuation of second-hand imported machinery - Transaction value - HELD THAT:- The Tribunal found that the importer had in fact produced a Load Port Chartered Engineer's certificate and that the authorities had rejected it only because it did not mention the year of manufacture. On comparison of the Load Port and local certificates, there was no dispute as to the identity of the goods, their used condition, or the fact that they were not reconditioned. The Board circular contemplated acceptance of a local Chartered Engineer's certificate only in the absence of a proper Load Port certificate; therefore, the authorities were required to first show that the Load Port certificate was improper in a material sense. Since the certificate contained the material particulars of the imported machinery, including its original value and its nature as used machinery, omission of one detail which did not dislodge the nature of the goods could not justify rejection of the declared value. The Tribunal accordingly held that redetermination based solely on the local Chartered Engineer's certificate was untenable. [Paras 6, 7] The redetermined value was rejected and the impugned order was set aside. Final Conclusion: The Tribunal held that the declared value of the imported used machinery could not be enhanced merely on the basis of the local Chartered Engineer's certificate when the Load Port certificate substantially satisfied the requirement as to the nature and particulars of the goods. The order upholding the enhanced valuation was therefore set aside and the appeal was allowed. Issues: Whether the declared value of imported second-hand machinery could be rejected and re-determined solely on the basis of the local Chartered Engineer's certificate, despite the existence of a Load Port Chartered Engineer's certificate.Analysis: The value of imported goods under Section 14 of the Customs Act, 1962 is governed by the transaction value, and rejection of the declared value requires a legally sustainable basis. The Load Port Chartered Engineer's certificate was on record and contained the material particulars sufficient to establish the used nature of the machinery. The local certificate did not create any real dispute on the identity or condition of the goods, and the omission of the year of manufacture in the Load Port certificate was not treated as a fatal defect. The circular governing second-hand machinery valuation contemplated use of a local certificate only where the Load Port certificate was absent or improper, and that situation did not exist here. Rejection of the declared value and enhancement based only on the local certificate was therefore unsustainable.Conclusion: The declared value could not be rejected on the facts of the case, and the valuation based solely on the local Chartered Engineer's certificate was not justified.