AMAR EMBROIDERY Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) This appeal is directed against the order in original C.A.O. No. 367/2001/CAC/CC/MCT, dated 7 -11 -2001 of Commissioner of Customs (Import), New Customs House, Mumbai. Under the impugned order the Commissioner confiscated a second hand BESR Barudan (Japan) embroidery machine imported by the appellant herein under Section 111(d) and 111(m) of the Customs Act. The importers were, however, allowed to redeem the goods on payment of a fine of Rs. 4 lakhs. A penalty of Rs. 1 lakh was also imposed on them under Section 112(a) of the Act. The confiscation was on the ground that the appellants had mis -declared the model and year of imported machine and the value of US 7500 declared in the invoice was a mis -declared lower price, the correct price being US 40000. The import was under invoice dated July 18, 2001 and the goods had been declared in the certificate issued by the Chartered Engineer manufactured in 1993. The year of manufacture was significant inasmuch as import of more than 10 years old machinery was not permissible under the Import Policy for the relevant period.

(2.) The impugned order fixed the age of the machine based on the report of the Indian Agent of Barudan, Japan that BESR series machines were manufactured between 1985 and 1989. The valuation of the machine was based on price data available at CTC Used Equipment Data Base which showed Barudan BESRH UF -20, 1989 as available at plus -minus US 45000. During the investigation of the case, the appellants' representative had also given statements to Directorate of Revenue Intelligence Officers that the actual transaction value of the machine was US 40000, but the same had been entered in the invoice at US 7500 to avoid customs duty. It was also stated to the investigation that the machine was of the year 1989, however, it was shown as of later year only to bring the machine within the permissible age for import. Even though the statements confirming the higher value and manipulation of year of manufacture had been recorded on 13 -9 -2001 from Shri Rajesh Kumar, Manager of the importer and Shri Mahesh Kumar, Partner of the importing firm, during the personal hearing before the adjudicating authority, the importer retracted on the statement and contended that the transaction value of US 75000 had been correctly entered in the import documents and that statements affirming a higher value was made before the DRI authorities under threat. It was also stated that they had not paid any higher value for the goods. It was also submitted that the year of manufacture of the machine is to be taken as the year mentioned in the report of Chartered Engineer of Korea who had certified the machine as of 1993 manufacture.

(3.) In the present appeal, the appellants have contended that the actual price of the machine was as declared in the invoice and that the model number as entered in the certificate of the Chartered Engineer is also 1993. It is also re -iterated that the purchase was made through negotiations at an exhibition of machinery at Delhi and the entire proceedings were illegal. The learned Counsel for the appellant emphasized that apart from the fact that the statements in question had been recorded under coercer as dictated to by the investigating officers, the method of valuation adopted by the customs authorities was entirely faulty. According to him, data on a Website cannot be the basis for valuation. It does not relate to actual transactions. He also pointed out that the valuation as undertaken by the customs authorities is not legal inasmuch the value is not based on the methods prescribed in the Valuation Rules, namely contemporaneous import value of identical goods or similar goods or value worked out from the sale price in India of imported goods. He has pointed out that, even though the impugned order has mentioned valuation based on Rule 8, a valuation based on internet prices can not be considered a reasonable method consistent with the principals and general provisions of Valuation Rules or Sub -Section (1) of Section 14 of the Customs Act.