K.L. Rekhi, Member (T)

1. In this appeal, the main dispute is on the true value of the second hand granite block cutting machine imported by the appellants. Incidental to that is the question whether the import licence tendered by the appellants had adequate value to cover the import of the machine. In the appeal before us the appellants have claimed the benefit of the lower rate of customs duty for project imports under Heading 84.66 of the Tariff also. We find that the show cause notice issued by the lower authority proposed to deny this benefit. The appellants made their submissions before the adjudicating authority but the said authority, the Additional Collector, has recorded no finding on the admissibility or otherwise of the project import rate in his impugned order. This Tribunal cannot take up this matter direct. The appellants will have to obtain a separate order from the Additional Collector first on the question of project import rate. The Additional Collector, on being approached by the appellants, should pass such order as early as possible.

2. The facts regarding the valuation dispute before us, in brief, are as follows. The appellants are an exporter of granite blocks and slabs. Before the granite rock or block is fed into the gang-saw machine for slicing into slabs, the four sides of the rock or block have to be slimmed to make them smooth. The machine, which is the subject of dispute before us, is used for this primary slimming. Before the port of this machine, the appellants were doing the slimming work manually which was not as good as the machine would give it. They spotted one second-hand machine lying idle with a Dutch party in Europe. The Dutch party had purchased this machine on 20.10.1980. They used it for over four years. The machine was dismantled by the Dutch party on 15.1.1985. The appellants showed interest in its purchase and the sale contract was concluded. The machine was shipped to the appellants on 20.12.1986. The appellants filed the requisite bill of entry for clearing the second-hand machine from customs. They declared the value of the machine at Rs. 98,498.56 and supported this declaration with the import invoice which showed the FOB value of the machine as DM 14,000. The Customs noticed that the declared value did not include the amount spent on freight. The value taken for customs purposes is normally the c.i.f. value, i.e., the value inclusive of freight and insurance. The Customs inquired about the freight amount. It was found to be about Rs. 34,000/-. The high freight of Rs. 34,000/- for the second-hand machine costing about Rs. 98,000/-raised doubts in the mind of the customs officer whether the declared value of the machine was genuine and correct. It appears that the customs officer made some oral inquiries about the fair price of such a machine. There is no written record of such inquiries. The result of these inquiries further strengthened the doubts in the mind of the customs officer. Therefore, he asked the appellants to produce the original sale invoice of the machine by which the machine, when new, had been sold to the Dutch supplier on 20.10.1980. The appellants produced the said invoice. It showed that the Dutch supplier had purchased it for Dutch Guilders 1,77,000. The Chartered Engineer's certificate dated 8.4.1986 which the appellants produced for clearance of the imported secondhand machine stated that by that time the cost of such new machine had risen to Dutch Guilders 2,15,000. i.e., an increase of about 25% over the 1980 price. The certificate further stated that the second-hand machine, before its shipment to the appellants, would be reconditioned/renewed. The Chartered Engineer certified the residuary life of the machine as six years. The Customs authorities calculated that after giving reasonable depreciation from the original price of Dutch Guilders 1,77,000, the price of the machine ought to have been over Rs. 7 lakhs and not as low as Rs. 98,000/- or so a