TaxTMI 
TaxTMI 
2013 (8) TMI 796
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....many' make and was imported on "as is where is basis" and was not reconditioned. The plate markings found on the goods indicated the year of manufacture as 1994. The goods were examined by a team of experts comprising of Appraiser/Machinery Expert and Appraiser/Automobile Expert in the presence of the Deputy Commissioner of Customs, the Import Manager and Manager (Mechanical) of the importing firm. The Expert Group was of the view that the fair value of whole plant covered under the two Bills of Entry mentioned above could be around Rs. 18 Crore @ Rs. 1 Crore per line. The Deputy Commissioner-in-Charge of assessment wanted to know the basis of arriving at the value of Rs. 1 Crore per line in the Examination Report dated 20-12-2002 submitted by the panel of Expert Appraisers. The said Expert Group in the report dated 7-1-2003 clarified the issue on the basis of imports made by M/s. Hindustan Pipe Udyog in 1991 for a similar plant, which was also of "Barmag" make. On the basis of the values declared in that, case the value per line of the plant worked out to Rs. 1,50,82,650/- for one line of 144 ends and Rs. 1,00,55,100/- in respect of one line with 96 ends. The total value in respec....
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....he differential duty demand was confirmed. The goods were confiscated with an option to redeem the same on payment of fine of Rs. 2 Crore and a penalty equal to duty i.e. Rs. 5,46,71,434/- was imposed on the appellant under Section 114A of the Customs Act, 1962. Hence the appellants are before us. 3. The learned Advocate for the appellant makes the following submissions. 3.1 In the import documents filed by them at the time of importation they had given a correct description of the goods and also the values as reflected in the invoices given by the foreign supplier. They had also got the goods inspected by M/s. Alex Stewart (Assayers) Inc. and the said inspection agency had issued a pre-shipment inspection certificate dated 24-10-2002 and had certified that the price of a new plant, if purchased on the date of inspection, was US $ 40,00,000/- FOB plus freight and insurance at actuals. Taking into account the fact that the year of manufacture is 1994, they certified that the purchase price of the plant at US $ 16,92,000 FOB plus freight and insurance at actuals is fair and reasonable. He further submitted that they had negotiated the purchase price with the foreign supplier an....
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....ny reliable evidence worth the name even after a lapse of a period of almost 10 years and a show-cause notice was issued vide Notice dated 2-1-2009 for finalization of the provisional assessment based on the report of the Expert Group which was given at the time of importation of the goods in 2002 itself. The department has not adduced any evidence in the show-cause notice showing that the appellant has under-valued the goods. Even though the imports made by Hindustan Pipe Udyog was adopted as the basis for finalization of the assessment, the department has not invoked Rule 5 or Rule 6 of the Customs Valuation Rules which provides for determination of transaction value on the basis of the contemporaneous imports of identical or similar goods and the assessment has been made under Rule 8 which is the Residual Rule to confirm the duty demands. In the absence of any evidence of the values of identical or similar goods contemporaneous to the present imports, the department could not have rejected the transaction value under Rule 4(2) of the Customs Valuation Rules. The learned Advocate also relied on the Judgment of the Hon'ble Apex Court in the case of Eicher Tractors Ltd. v. Commissi....
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....d those were also provisionally assessed and there is no evidence that the said bills were finally assessed and if so, on what basis. 3.4 It is also pointed out that the demand under Section 28 of the Customs Act, is ab initio not sustainable as the demand under the said Section can be made only when there is non-levy or short. Levy in the final order of assessment. In the instant case, the goods were not finally assessed and, therefore, the question of demanding duty under Section 28 does not arise at all. He also relied on the Judgment of the Hon'ble Apex Court in the case of Commissioner of Central Excise & Customs v. ITC, Mumbai - 2006 (203) E.L.T. 532 (S.C.) wherein the Apex Court held that the proceedings under Section 11A can be invoked only when duty has not been levied or paid or has been short-levied or short-paid and where the goods are provisionally assessed under the Act or the Rules made thereunder, the date of adjustment of duty after the final assessment thereof. The proceedings under Section 11A cannot be initiated without completing the assessment proceedings. The ratio of this Judgment will apply to the facts of their case also. Accordingly, the demand under S....
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.... report of the Expert Group as to the "make" and "model" of the goods imported by Hindustan Pipe Udyog, the year of manufacture, the residual life of the plant etc. First of all, the machinery chosen for comparison should be of contemporaneous imports. In the case of Hindustan Pipe Udyog, the importation was during 1991, whereas in the instant case the importation was in 2002, after a lapse of more than a decade. Therefore, the case chosen for comparison is not contemporaneous at all. Secondly, the condition of the machinery imported is very relevant in determining the value of the machine. When the machine is imported on 'as is where is basis' and was not reconditioned the comparison has to be made with a machinery in a similar condition. It is also a well known fact that the value of the machinery will depend upon its make, model, year of manufacture and its residual life. In the instant case, these particulars are not available in respect of the plant and machinery imported by M/s. Hindustan Pipe Udyog Pvt. Ltd. Therefore, the comparison of the value of the goods under importation with that of M/s. Hindustan Pipe Udyog Pvt. Ltd., is like comparing chalk with cheese. If imports m....
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....to reject it as evidence of value of imported goods. Under-valuation has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the department in support of its allegation of under-valuation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. ....
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.... done by the Docks staff shall continue." 5.5 In the instant case, we find that the appellant importer had satisfied all the guidelines prescribed. If that is so, we do not understand how the department can reject the transaction value declared by the appellant. In the case of Eicher Tractors Ltd. (supra) the Hon'ble Apex Court held that only in those special circumstances particularized in Rule 4(2) of the Customs Valuation Rules, 1988, valuation needs to be done under the Customs Valuation Rules. If these special circumstances are absent, it is mandatory for the Customs to accept the price actually paid or payable for the goods in the particular transaction; conversely, if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules. The exceptions specified in Rule 4(2) are reproduced below :- "(a) there are no restrictions as to the disposition or use of the goods by the buyer other than restriction which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be....