ORDER

1. The appellant filed Bill of Entry No. 337431 dated 18-7-2001 covering one second-hand automatic transfer honing machine with three honing stations. The declared value of the said goods was DM 150,000 equivalent to Rs 31,12,500 which was cleared on the basis of supplier's (Robert Bosch GMBH Germany) Invoice No. W47408 dated 7-6-2001. Accordingly, on the declared assessable value of Rs 40,88,835 in CIF terms (based on the invoice value) assessment was sought by the assessee under Sub-Heading 8460.40 @ 25% basic customs duty with CVD @ 16% (8460.00) and SAD 4%.

2. The authority-in-original viz. the Deputy Commissioner of Customs, rejected the declared value/transaction value by observing thus:

"... Hence the foremost requirement for accepting the transaction value/invoice price under Section 4(1) that it should be the price at which such or like goods are ordinarily sold or offered for sale, is not fulfilled in this case."

3. The authority-in-original then proceeded to examine the applicability of Rules 5 to 8 sequentially in order to determine the transaction value/assessable value of the goods and determined the assessable vatue at Rs 1,35,90,307.54 in FOB terms in terms of Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (for short "the Rules") which provides for the residual method of determining the assessable value.

4. The assessee, being aggrieved, filed an appeal which came up for hearing before the Commissioner of Customs (Appeals), Chennai. The appellate authority, by its order dated 31-8-2001, relying upon a judgment of this Court in Eicher Tractors Ltd. v. Commr. of Customs!, accepted the appeal, wherein it was held that "the transaction value in Rule 4 of the Rules is limited to the transaction in question and that this mandate is only subject to certain exceptions specified in Rule 4(2)". It was further held that the term "ordinarily sold" in Section 14(1) of the Customs Act, 1962 implies the exclusion of extraordinary or special circumstances as detailed statutorily in Rule 4(2).

5. The Commissioner also relied upon a judgment of this Court (sic the Tribunal) in Rugmini Ram Raghav Spinners (P) Ltd. v. Commr. of Customs2, wherein it was held that: (ELT pp. 368-69, para 13)

"13. ... Section 14 (read with Rule 4) recognises the primacy of transaction value, whether it be new goods or second-hand machines. ...

law does not allow rejection of transaction value under Rule 4 by ab initio application of Rule 8; that would be putting the cart before the horse. The principle involved is that the 'actual' cannot be superseded by the 'deemed', unless the 'actual' is first rejected in terms of Section 14 read with Rule 4 ibid." The Commissioner thus held that the question of rejection of the transaction value and determining the value under any of the rules subsequent to Rule 4 will not arise at all.

6. Aggrieved by the aforesaid order of the appellate authority, the Department went in appeal before the Customs, Excise and Gold (Control) Appellate Tribunal (for short "the Tribunal"). The Member (Judicial) by his order dated 29-7-2002 rejected the appeal filed by the Revenue and Member (Technical) by his order dated 7-8-2002 allowed the appeal. In the light of the difference of opinion, the matter was placed before a third member of die Tribunal who allowed the appeal by setting aside the order of the first appellate authority and restoring that of the adjudicating authority.

Accordingly, in view of the majority decision of the Tribunal, the appeal of the Revenue was allowed thus rejecting the transaction value as determined by the first appellate authority by using the depreciation method of calculating the transaction value of the goods.

7. According to Mr Joseph Vellapally, learned Senior Counsel for the appellant assessee, the decision of the Tribunal runs counter to the principles laid down by this Court in Eicher Tractors1 and the subsequent decisions of this Court in ValdUal Dairy In