Full Judgment
2. The facts in brief are as follows. The appellant filed a Bill of Entry for used car (Renault saloon model 1992) claiming importability in terms of ITC Public Notice No. 3/97. He produced an invoice in his name indicating purchase of the said car in second-hand condition for a net value paid of 2250 pounds. The Customs did not accept the valuation. The initial valuation was done at Rs. 4,24,669/- which was later reassessed to Rs. 2,99,880/-. On examination of the importability it was found that the engine capacity of the car was 1700 cc and also that the importer was in possession of the car for a short period. The said Public Notice prescribed minimum possession of one year and the engine capacity as less than 1600 cc. Thus it appeared that the importer was not eligible for importation of the said vehicle.
3. A show cause notice dated 19-3-1999 was issued alleging liability to confiscation of the car under Section 111(d) of the Customs Act, 1962 and liability to penalty under Section 112 of the Customs Act, 1962.
Significantly, even though, the entire story of valuation of the car was narrated in the show cause notice, no allegation was made that the transaction value claimed by the importer was not acceptable and that there was a proposal for enhancing the valuation of the car. Mr. Gupta submitted that no separate assessment order was given to him. The Additional Commissioner passed the order after hearing the importer. In the adjudication order, he confiscated the car but allowed redemption on payment of fine of Rs. 1.00 lac, and also imposed a penalty of Rs. 35,000/- on Mr. Gupta. Although in the order he refixed the valuation at Rs. 2,99,880/-, he did not give reasons therefore nor cite the rule of the Customs (Valuation) Rules he was relying upon. The importer then filed an appeal. The Commissioner (Appeals) observed that for second-hand goods there was no international market and that the valuation thereof had to be determined under Section 14 of the Customs Act, 1962. He therefore rejected the claim for transaction value and upheld the order of confiscation. He however reduced the fine from Rs. 1.00 lac to Rs. 75,000/- and penalty from Rs. 35,000/- to Rs. 20,000/-.
Hence the present appeal.
5. The valuation of second-hand articles always poses problems because there is no uniformity or standardisation possible for second-hand goods. For the last few years the law evolved in the case of valuation of second-hand cars is that in the absence of the manufacturers invoice, reliance would be placed on the manufacturers Price List. If the Price List is not available, then reliance would be placed on valuation shown in the World Car Catalogue. From this price as the basis, the depreciation is worked out and the valuation arrived at. In the present case, it appears that neither the manufacturer's invoice, nor the manufacturer's Price List was available. The importer placed reliance on the Parker's Price Guide. The Additional Commissioner records to the effect that car prices were determined by reference to Parker's Guide. Before the Additional Commissioner Mr. Gupta did not accept Parker's Guide as the starting material but placed reliance on a copy of their quotation dated 29-8-1999 showing the range of cars akin to the imported car between 1035 pounds and 2360 pounds depending upon the condition.
6. We find the peculiar circumstance in this case and that is as observed by us earlier, the enhancement of valuation did not come in the manner of an assessment order, nor in the form of an order following issue of a show cause notice. The enhancement merely forms part of a discussion although the show cause notice did not claim that the valuation was not acceptable to the Customs. It is settled law that, before ordering enhancement, a requisite notice has to be given to the importer disclosing the evidence which was sought to be relied upon in not accepting the valuation claimed by him. Thereafter in the absence of an acceptance of transaction value in terms of Rule 4 of the Customs (Valuation) Rules, the valuation officer has to proceed sequentially for determination of the correct price. If the sequential rules do not meet with the situation, then the question of fair assessment under Rule 8 would arise, but at that time the officer evaluating the goods has to record his reasoning.
7. In the present proceedings, we find that except during the hearing no opportunity was given to the importer to state his case, nor evidence was disclosed to him for the proposal of revaluation and that the show cause notice did not speak of under valuation at all. Even the show cause notice speaks of very wide range of valuation where the Customs themselves after initially fixing the value at Rs. 4,24,669/- subsequently reduced it to Rs. 2,99,880/-. We find that the entire exercise in valuation was done without following the basic tenets of the valuation. This modus operandi lacks the basis of law which cannot be sustained and therefore the valuation based thereupon also cannot be sustained. In this peculiar circumstance, the valuation as accpted by Mr. Gupta before the Additional Commissioner and that is Rs. 2,29,000/- should be accepted as the proper value.
8. We now come to the aspect of confiscation and resultant orders. Mr.
Gupta does not contest that the engine capacity of the car imported by him and the condition of stay are not within the parameters of the Public Notice. The liability to confiscation of the car under Section 111(d) is therefore established and is upheld. However, as Mr. Gupta submits, subsequent to the passing of the order in which the quantum of fine was given, Mr. Gupta has incurred considerably higher amount of demurrage. On this ground we give a further reduction in the fine and specify the quantum thereof at Rs. 20,000/-.
9. Mr. Gupta submits that he was not aware of the conditions of the Public Notice. We are unable to accept his claim. The car was imported under the Public Notice. However, since Mr. Gupta states that since the car was for his own use and not for trading purpose, we feel that the penalty has to be reduced and reduce the quantum from Rs. 20,000/- to 5000/-.