K.L. Rekhi, Member (T)

1. The dispute in this appeal is on the valuation of a second hand Computer, and its 12 peripherals imported by the appellants. The appellants declared their value at Rs. 3,10,270. The adjudicating Collector has assessed the value at Rs. 15,06,217 and, in addition, on the charge of mis-declaration and short-fall in the import licence value, imposed a fine of Rupees one lakh in lieu of confiscation of the goods. No penalty has been imposed.

2. We have heard both sides and have carefully considered their submissions. The appellants say that Shri P.V. Nambiar, a non-resident Indian, purchased a second hand IBM Computer, model 4331 - 301/31, 1 Megabyte Memory, of 1979 manufacture, and with peripherals, at Dubai in 1982 from a company named Comcap BV for $ 31,000.... He used it in Dubai till early 1985. It was imported into India in May 19.85 under the NRI Scheme. It is this machine which is the subject matter of this appeal. Before import, the machine was hot-staged and tested in U.K. The Chartered Engineer, who examined the Computer and its peripherals after hot-staging, certified its residual life at 8 to 10 years and its market value in May 1985 at £ 20,000.

3. The Collector has based his assessment on the value of a new Computer Model 4331 - 11 of 1982 manufacture, with peripherals, software and on-site' maintenance, at $ 92,420, as given in the AT T Teletype Corporation Data Sources, Third Quarter, 1984 Edition and given 10% annual depreciation for 3 years (1982 to 1985) therefrom. The appellants point out the dis-similarities between the two systems. There is no dispute that it was Model 4331 with IBM Memory. But beyond that there is disagreement. The appellants claim it was Series 1. The Collector says hat there is no marking of the Series on the goods imported or in the invoice. But, then, there is no marking of the Series 11 either on the goods or in the invoice. The Collector seems to have chosen the price of Series 11 as perhaps it was the only comparable one figuring in the Data Sources. It was of 1982 manufacture. The appellants say that theirs was an older Model of 1979 the manufacture of which was discontinued by IBM in 1981. This may be the reason why it was not listed in the Data Sources of 1984 Edition. Apart from the Series and the year of manufacture not tallying, the appellants point out, the price as given in the Data Sources, was inclusive of the cost of software and on-site maintenance. They had not imported any software nor their price had an In-built provision for on-site maintenance. Further, they plead, the rate of annual depreciation adopted by the Collector - 10% - was very low when the Income-tax Department, allowed depreciation of 33-1/3% for Computers.

4. The' appellants plead that the method of valuing second hand Computers on depreciation method was not right. It is common knowledge that, unlike other machinery, computers became obsolete very fast as soon as newer and better models appeared and when that happened, the older models, though still having a good residual life, could be had for a song. The appellants placed or record a Blue Book "Computer Price, Guide", July 1985 Edition, published by Computer Merchants Inc., New York, which gives ruling retail market prices of second hand computers alongside their prices when new. This book says that prices of used Computers were liable to fluctuate from day to day and that the quotations which it gave were representative of the "snap-shot picture" of the market conditions as obtaining prior to the date of publication. The book gives two quotations for Model 4331-1, IBM as under :-

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5. We find force in the appellants' pleading. The learned representative of the department, when confronted with the evidence of the Blue Book's contemporary price quotations for used computers in the international market, had nothing much to say. He had no contrary evidence to show.

6. The appellants submitted that since their goods ha