Imported photocopier parts must be valued on actual goods imported; components can still fall under licence coverage.

Imported used photocopier parts had to be valued on the basis of the actual goods imported, not by treating them as a complete photocopier and applying depreciation; absent evidence of undervaluation, the invoice value could not be displaced. The goods were also treated as components covered by the Special Import Licence because policy treated components as parts of a sub-assembly or assembly, and items necessary for assembly did not fall outside licence coverage merely because they formed part of a larger set.

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Issues: (i) whether the value of the imported second-hand photocopier parts could be enhanced by taking the value of a complete photocopier and allowing depreciation; (ii) whether the imported goods were components covered by the Special Import Licence or sub-assemblies outside its scope.

Issue (i): whether the value of the imported second-hand photocopier parts could be enhanced by taking the value of a complete photocopier and allowing depreciation.

Analysis: The goods were found to be used, incomplete, second-hand re-conditioned photocopiers or parts thereof, and the importer had described them as used photocopier main frame with hardware and PCB. The valuation adopted below proceeded on the footing that a complete photocopier had been imported, although the record itself showed that only about 60% of the complete machine was involved. The value therefore had to be determined with reference to the actual imported goods. In the absence of evidence establishing undervaluation, the invoice value could not be displaced merely by applying a depreciation method based on the value of a complete machine.

Conclusion: The enhancement of value was unjustified and is set aside in favour of the assessee.

Issue (ii): whether the imported goods were components covered by the Special Import Licence or sub-assemblies outside its scope.

Analysis: The relevant policy definition treated a component as one of the parts of a sub-assembly or assembly, and the distinction between components and sub-assemblies was not treated as mutually exclusive. Since the imported goods were necessary for assembly of the photocopier machine, they answered the description of components. The mere fact that the goods were in sets or formed part of a larger assembly did not take them outside the licence coverage.

Conclusion: The imported goods were covered as components under the Special Import Licence, in favour of the assessee.

Final Conclusion: The impugned order could not be sustained either on valuation or on licence coverage, and the appeal succeeded.

Ratio Decidendi: Valuation of imported goods must be made on the basis of the actual goods imported, not on the value of a complete machine, and goods that are parts necessary for assembly may qualify as components even if they are part of a sub-assembly.

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