Imported used computers need valuation based on obsolescence, and import eligibility depends on the applicable policy.

Imported used computers should be valued by reference to their own characteristics and rapid obsolescence, rather than by automatically applying depreciation norms designed for ordinary machinery, and the assessment method must be reconsidered accordingly. The note also states that eligibility to import such computers as capital goods for use in a service industry depends on the applicable import policy and the relevant facts, so that issue too requires fresh examination. On that basis, both valuation and import eligibility were sent back for reconsideration.

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Issues: (i) whether depreciation for imported used computers could be determined by applying the norms for machinery; and (ii) whether the computers were eligible for import as capital goods for use in a service industry under the applicable import policy.

Issue (i): whether depreciation for imported used computers could be determined by applying the norms for machinery.

Analysis: The goods were computers, not ordinary machinery, and their value would depreciate rapidly because of obsolescence. A five-year-old computer would ordinarily have lost most of its original value. The depreciation norms applicable to machinery were therefore not appropriate for determining the assessable value of such computers, and the special norms for computers required consideration.

Conclusion: Decided in favour of the assessee. The valuation adopted by applying machinery depreciation was held to be incorrect and requires reconsideration.

Issue (ii): whether the computers were eligible for import as capital goods for use in a service industry under the applicable import policy.

Analysis: The claim of eligibility as capital goods for a chartered accountancy service industry was not rejected outright and was found to merit consideration on the facts and the import policy applicable to the period. The issue required fresh examination by the original authority along with the valuation question.

Conclusion: Decided in favour of the assessee to the extent that the matter was held fit for reconsideration on import eligibility.

Final Conclusion: The matter was sent back for fresh decision on both valuation and import eligibility, with the earlier assessment approach not being sustained.

Ratio Decidendi: Imported used computers require valuation on the basis of their own characteristics and rapid obsolescence, and cannot automatically be subjected to depreciation norms meant for machinery; import eligibility under the applicable policy must also be examined on the relevant facts.

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