Valuation of second-hand machinery: declared invoice value rejected, depreciated customs value upheld, penalty reduced.

Imported second-hand machinery was treated as unauthorised where the licence description matched the model but not the year of manufacture, and later licence amendment and an after-the-fact public notice did not cure the mismatch. The declared invoice value was rejected because it did not reflect the actual goods imported; in the absence of the manufacturer's invoice, valuation could be based on the chartered engineer's certificate and depreciation under customs valuation rules. The redemption fine was sustained as proportionate to the unauthorised import and enhanced value, while the penalty was reduced as the breach was largely technical.

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Issues: (i) Whether the imported second-hand machines were covered by a valid import licence or the relevant import policy and were therefore liable to confiscation; (ii) whether the declared invoice value of the second-hand machinery was acceptable for assessment or value had to be redetermined on a depreciated basis; (iii) whether the redemption fine and penalty required interference.

Issue (i): Whether the imported second-hand machines were covered by a valid import licence or the relevant import policy and were therefore liable to confiscation.

Analysis: The licence description matched the machine model and other particulars, but the year of manufacture did not tally. The year of make was material because importability of second-hand machinery was subject to age restrictions, and the later amendment to the licence could not cure the mismatch for goods already imported. The public notice relied on for open general licence treatment also did not assist because it was not in force when the goods were shipped and landed. The relevant policy therefore still required a valid specific licence.

Conclusion: The licence did not cover the imported machines, and the import was unauthorised and liable to confiscation.

Issue (ii): Whether the declared invoice value of the second-hand machinery was acceptable for assessment or value had to be redetermined on a depreciated basis.

Analysis: For second-hand and reconditioned machinery, identical contemporaneous imports were not a realistic benchmark. The declared invoice value reflected a machine of a different year of make and therefore could not safely be accepted as the transaction value for the actual imported goods. In the absence of the manufacturer's invoice, the authority was justified in using the price shown in the chartered engineer's certificate as the starting point and then applying depreciation consistent with Section 14 of the Customs Act and the valuation rules. The resulting depreciated valuation was not shown to be arbitrary.

Conclusion: The declared value was rightly rejected and the reassessed value on depreciation basis was upheld.

Issue (iii): Whether the redemption fine and penalty required interference.

Analysis: The redemption fine was not considered excessive in view of the enhanced value of the goods and the unauthorised import. However, the penalty was regarded as somewhat high having regard to the largely technical nature of the breach.

Conclusion: The redemption fine was sustained, while the penalty was reduced.

Final Conclusion: The confiscation and valuation findings were maintained, but the penalty was moderated, resulting in only limited relief to the importer.

Ratio Decidendi: In valuation of second-hand imported machinery, the declared invoice value may be rejected where it does not correspond to the actual goods imported, and the value may be determined on a reasonable depreciated basis consistent with Section 14 of the Customs Act, 1962 and the Customs (Valuation) Rules, 1988.

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