Per Mathew John, J.
1. When the case was called out no body was present for the Respondents. On previous two occasions, when it was called, the matter was adjourned at the request of the ld. Advocate. On 5.12.2011, the matter was adjourned to 24.1.2012, that is the date of present hearing, at the request of the Advocate but still there is no one present to represent the Respondents. So we have gone through the file with the help of the A.R. for Revenue.2. The Respondents imported old and used machinery viz. used continuous strip casting line comprising machine furnace. They submitted invoice No. 16081 dated 22.7.2005 issued by M/s Metro Alloys and Residues Limited, U.K. showing the value of the goods as GBP 35,450 (C&F) equivalent to Rs.26,95,972.50 at the exchange rate of GBI=76,050/. They also submitted a certificate issued by M/s Pual Clarkson, Chartered Engineers, U.K. in support of their declared value. The Revenue was of the view that the value declared for the machine is not proper and they enhanced value of Rs.1,09,59,752.40. The Respondents cleared the goods on payment of duty on enhanced value and preferred an appeal before the Commissioner of Customs (Appeals). The Commissioner (Appeals) observed that the adjudicating authority has not passed a speaking order in the matter and therefore the matter was remanded to the adjudicating authority to pass a speaking order. Thereafter, the adjudicating authority issued a speaking order. The adjudicating authority explained the reason for loading the assessable value as under :-
'In this case, the subject goods are old and used. The supplier of the goods i.e M/s Metro Alloys and Residues Limited, U.K. are not the manufacturer of the goods and from their invoice raised on the importer appear to be metal merchants dealing in non ferrous nickel alloys-metals and residues. The importer in his reply dated 23.6.2006 has submitted that he was able to procure a price of GBP 35,450 (C&F) and claimed to have submitted a copy of the invoice of the manufacturer. However, no such invoice from the manufacturer had been submitted. The importer submitted Chartered Engineer’ Certificate along with other import documents in support of their declared value wherein the year of manufacture of the goods was mentioned as 1970 and its C&F value in the year of manufacture was shown as GBP 4,75,000 (C&F). After inspection of the goods, the Chartered Engineer found that normal maintenance procedures had been followed and as such the condition of the equipments was goods; that normal expected residual life, subject to proper maintenance procedures being followed, was more than 15 years; that the spares presented were either new or in goods enough condition to represent 80% of their normal life expectancy; that the technology involved equivalent was consistent with present day practice which has not radically changed but found the asking price of GBP 35,450 (C&F) reasonable without giving any logical reasoning to come to his conclusion that such a low price of the goods i.e. just 7.25% of the original value was reasonable.
The inspection report of the Chartered Engineer, as stated above indicated that machine was in good working condition having considerable residual life and it is matchable with contemporary technology (thus not obsolete) accordingly it was fair assumption that normal sale value of goods could not have been so low. The screening of documents also revealed that the very basic indicator towards the cost of machine i.e. size of machine, gross weight of machine (73.080 MT), the characteristic as continuous casting line comprising of a machine furnace, its usage that of usage under high temperature, pressure and continuous wear and tear and a significantly higher value in the year 1970 indicted that it has to be made of high quality components. Accordingly, it could be reasonably concluded that the value of machine should have been significantly higher than what was declared. Accordingly the value declared by the importer was rejected under Rule 10A of the Valuation Rules 1988 and the importer was asked to explain his case. The importer, at the time of import, could not explain why declared value should not be rejected. Therefore, keeping in view the observations made by the Chartered Engineer about the condition of the goods, the physical inspection of goods, technology involved and residual life of the goods and comparison of the declared value with the value of the goods in the year of their manufacture, the declared value was found to be low. As the subject goods were old and used, value of the goods under Rule 5, 6 or 7 of the Customs Valuation (Determination of Prices of Imported Goods) Rules, 1988 (hereinafter referred to as the Valuation Rules’) could not be determined. Thus Rule 8 of the Valuation Rules was restored to in determination of the value of the goods. Boards Circular 493/124/86-CUS VI dated 19.11.1987 which prescribes the manner of arriving at the value of capital goods (old and used) was also referred to in arriving at the value of the goods. Accordingly, it was felt that residual value of machine 30% of original price was reasonable valuation of goods. Taking the value of the goods in their year of manufacture i.e 1970 as GBP 4,75,000 (declared in the Chartered Engineer’s Certificate submitted by the importer) and after allowing depreciation of 70% the value of the goods arrived at Rs.1,09,59,752.40 (assessable value).
3. Aggrieved by the order, the respondents filed appeal with the Commissioner (Appeals). The Commissioner (Appeals) allowed the appeal of the Respondents on the following grounds :-
'It is also not the case of the department that there was any special relationship between the importer and the supplier and that the former has paid anything extra over and above the transacted value.
There is no charge of mis-declaration of goods. In fact it has been accepted by the department that the impugned goods were second hand machinery and accepted the findings of he Chartered Engineers to that effect. In case of any charge of mis-declaration the burden is on the department as held by Honble Supreme Court in the case of union of India Vs. Garware Nylons 1996 (87) ELT 12 (SC).
Hon’ble Supreme Court in the case of Tolin Rubbers Pvt. Ltd. Vs. Commissioner- 2004 (163) ELT 289 (SC) has held that valuation of second hand machinery under Rule 8 is not permissible without first ruling out transaction value provided in Rule 4 of the Customs Valuation Rules 1988.
In the case of Anish Kumar Spinning Mills Vs. Commissioner 2004 (172) ELT 394 the Hon’ble CESTAT held that the Chartered Engineers Certificate of foreign supplier cannot be rejected especially when its genuineness is not doubted. In the present case also, the genuineness of the Chartered Engineers Certificate is not doubted. Therefore there is no justification for disregarding the certificate of the Chartered Engineer. The Adjudicating Authority should have either accepted or rejected the certificate of the Chartered Engineer in full. In the case of Hartex Elastomers Pvt. Ltd. Vs. Commissioner of Customs 2001 (128) ELT 232. Hon’ble Tribunal has while discussing certificate of Chartered Engineer for valuation of second hand machinery held that the Certificate can be accepted in totality or not accepted. One cannot pick and chose and accept part of the same Certificate. Hence it was not correct on the part of the Adjudicating Authority to accept the condition of the machinery as per the Certificate of Chartered Engineer but reject the value put by him on the machinery.
4. The main argument of the Commissioner (Appeals) is that the Revenue should have either accepted the certificate of Chartered Engineer, U.K. in full that is inclusive of the date of manufacture and the depreciated value rather than accepting the date of manufacture of the machine and not the depreciated value. It is his further argument that Revenue has not been able to prove any extra remittance other than what is shown in the invoice produced.
5. In the present case it is to be taken note of that the depreciated value as certified by Chartered Engineer, U.K. is only 7.25% of the invoice value in 1970, whereas he certified that the residual life of the machine is more than 15 years subject to proper maintenance and procedure being followed and also that the spares presented were either new or in good enough condition to represent 80% of the normal life expectancy and that the technology involved equivalent was consistent with present day practice which has not radically changed. It does not make any economic sense to import a machine which has only 7.25% as residual value as declared by importer. It is to be noted that the invoice produced is not of any manufacturer or any person who was actually using machine earlier and is of a scrap dealer in U.K. These are circumstances which can cause genuine doubt about the value declared. In such a situation when the Revenue inquired about the correctness of the value the Respondent agreed to increasing the value to Rs.1,09,59,752/- and the Respondents took clearance of the machine
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at the increased value. We are not in agreement with the argument of Commissioner (Appeals) that since the date of manufacture as 1970 and the invoice value in 1970 to be GBP=475,000 given by the Chartered Engineers abroad are accepted the rest of the certificate regarding value should also be accepted. The first two are of facts and the third is an opinion. So there is no infirmity in accepting the facts and rejecting the opinion. Old and used machinery is inherently prone to undervaluation. In fact from the Government of India has amended the import policy to the effect that old and machinery having residual value less than 80% of the original value is not allowed for import. Considering these facts and the fact that the adjudicating authority has followed the valuation method prescribed by Board for arriving at reasonable price and at the time of assessment the respondent accepted the price suggested by Revenue we find merit in the appeal filed by Revenue and the appeal is allowed and the adjudication order is upheld.