Customs valuation of second-hand moulds may rely on cost of new goods plus depreciation when comparables are unavailable

Second-hand moulds imported free of charge raised valuation difficulty because the declared invoice value had no satisfactory basis and the supplier was not the manufacturer. The note states that direct comparison under Rules 5, 6 and 7 of the Customs Valuation Rules was impracticable unless comparable goods were shown to be substantially identical in condition, use and manufacture. In that situation, the appropriate approach was to determine the cost of new moulds at the relevant time and apply suitable depreciation, with re-determination on a best judgment basis where reliable comparative data was unavailable.

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Issues: Whether the declared invoice value of second-hand moulds imported free of charge could be rejected, and whether valuation had to be determined by reference to Rules 5, 6 and 7 of the Customs Valuation Rules or by best judgment under Rule 8.

Analysis: The declared value was unsupported by any satisfactory basis, the supplier was not the manufacturer, and the goods were supplied free of charge. The valuation adopted by the appraising authorities was also not fully supported by reliable comparative data. For second-hand moulds, direct comparison under Rules 5, 6 and 7 was impracticable unless the goods compared were shown to be substantially identical in condition, use and manufacture. In such circumstances, the proper course was to ascertain the cost of new moulds at the relevant time and apply appropriate depreciation, with the matter then being re-determined by the assessing authority on that basis.

Conclusion: The declared transaction value was not accepted, and valuation was required to be redetermined on a best judgment basis by the Assistant Commissioner.

Final Conclusion: The appeal succeeded, the impugned order was set aside, and the customs valuation issue was remitted for fresh determination in accordance with law.

Ratio Decidendi: Where the declared value of imported second-hand goods is unsupported and reliable comparables are unavailable, valuation may be made on a best judgment basis after determining the cost of new goods and applying appropriate depreciation.

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