Full Judgment
Hence the appeal.
2. Briefly the facts are that the Appellants imported one second hand unused floor type horizontal boring machines with accessories and declares the value of Rs. 43,48,329/- C.I.F.(DM 18000 FOB) and filed bill of entry for its clearance. The correspondence between the indenting agent in India and the Appellants revealed that the machines in question is in brand new condition and is being offered for sale to the Appellants as second hand machine. The price of the machine in 1993 was DM 300000/- in 1993. However, it is seen from inter office memo dt.
28-11-1997 from one Shri. R. Shankar, Vashi office of the importer to Mr. S.K. Dubhe, purchase department, C.B.D., Belapur that the original price of the machine was infact D.M. 4,00,000/- f.o.b.
3. Taking into consideration the above evidence the Commissioner rejected the transaction value of D.M. 1,80,000/- f.o.b. and proceeded to determine the value as D.M. 4,00,000/-. The grounds for rejection are that it is a distress sale and so the price payed are payable is not in the course of normal international trade. The second ground is that the machine under import is a brand new one and not second hand as declared. A second hand machine means one that is used and not an unused machine even though the machine has changed hands from one to another. On such machines no depreciation need be given. The inter office memo shows that the value of the machine in 1993 is D.M.4,00,000/-. This value should be adopted for the purpose of assessment the rejecting invoice value of D.M. 1,80,000/-.
5. The ld. Advocate Shri. Vipin Jain assailed the order on two counts.
The department had no reason to reject the transaction value. None of the conditions under Rule 4 of the customs valuation rules exist in their case for the department to reject the transaction value. The contention of the department that the goods are not second hand is devoid of any substance. It is clearly established that the machine was lying in a godown in Germany as the original buyer refused to take delivery. The date of import is 20-12-97 whereas the machine is a 1993 make. Any machine which was manufactured in 1993 and was lying in a godown for 4 years has to be considered as a second hand machine only.
He further argued that the department has erred in determining the value as D.M. 4,00,000/- on the basis of an inter office memo. Such a memo cannot be a basis for rejecting the transaction value. Further the department is wrong in concluding that no depreciation is allowable on a second hand machine even when the Department chose to reject the transaction value.
6. The ld. J.D.R. Shri. K.K. Shrivastav argued that the machine in question is not an used one and therefore cannot be called the second hand. The adoption of D.M. 4,00,000/- as the f.o.b value of the machine is based on evidence gathered. Once a transaction value is rejected on the ground that the transaction is not in the normal course of international trade the value has to be arrived at on some rational basis. The department is right in relying on the evidence in the form of office memo for determining the assessable value.
7. We observe that the transaction value in the present case is rejected without sufficient case. It is not the case of the department that the conditions for rejection of value under Rule 4 of the valuation rules exist in this case. The apex court in the case of Eicher tractors Ltd. (2000 (122 ELT-321 ) held that transaction value can be rejected only when the provisions of Rule 4 are satisfied. The ratio of this judgment applies in the present case. It is not important whether the machine under import is used or not. The price paid or payable for the machine is D.M. 1,80,000/- The Commissioner (A) observes that there is clear cut evidence of an attempted under invoicing whereas the original authority does not make any such allegation. That is the reason why ;he did not impose any penalty.
According to the original authority the case before him is of accepting or rejecting the transaction value. We find no justification in rejecting the transaction value in this case.