Per Shri V.K. Ashtana :

This is an appeal against Order-in-Original No. 134/97-CAU dated 09.09.97 by Commissioner of Customs, wherein the declared value of 4 second hand machines (Autoconers) supported by a Chartered Engineer's Certificate from the country of export, has been rejected and they are re-valued under Rule 8 of Customs Valuation Rules on the basis of the price of similar new machines by their German manufacturer with 70% depreciation on usage etc. A differential duty of Rs. 12,41,985/- has been confirmed, but no fine or penalty imposed.

2. The importer has also produced two more certificates from local experts on values declared - one from a chartered engineer and the other from an engineering college faculty. They argue that as their declared transaction value has neither been rejected on basis of contemporaneous imports of like goods nor on relationship or fraud, therefore, Rule 4 and not Rule 8 ibid should be applied.

3. Heard learned Advocate Shri V. Ramanujam for appellants. Reiterating grounds of appeal, he cited the following decisions:

i) 1996 (17) RLT 113 (T) = 1996 (67) ECR 319 (Tri.) Indo Swiss

ii) 1997 (69) ECR 255 (S.C.) CC Vs. Nippon Bearings

iii) 1997 (96) ELT 121 (Tri.) Continental Constructions

iv) 1997 (71) ECR 215 (Tri.) Rajendra Mills

v) 1996 (84) ELT 116 (Tri) Damehra Steels & Forgings

4. Heard learned S.D.R. Shri R. Victor Thyagaraj. He stressed that learned Commissioner correctly held that as no detailed basis for valuation was given by foreign Chartered Engineer, hence it was not acceptable. On the contrary manufacturer's price was ascertained and an equitable 70% depreciation given under Rule 8 to arrive at a fair value. He cited in support following:

(a) Case of Rakesh Press

(b) Case of Pragati Press as reported in 1994 (72) ELT 620 (Tri.)

(c) Case of Udeshwara as reported in 1989 (39) ELT 630 and

(d) Case of Tara Art Printery as reported in 1985 (20) ELT 358 (Tri.)

5. At this point learned Advocate rose to rebutt that in Preto Industries 1996 (81) ELT 506 the decision of Rakesh Press on such imports was distinguished.

6. We have carefully considered the arguments on both sides and records of the case. We find that in the case of Damehra Steels & Forgings (1996 (84) ELT 116) Hon'ble Special Bench by a 3 Member decision had clearly held that a certificate by Chartered Engineer on value of second hand machinery cannot be rejected without proving contemporaneous import to the contrary of a like kind of goods. This has been upheld by Hon'ble Supreme Court as they dismissed Revenue's SLP as reported in 1996 (82) ELT A 101. This is now good law.

7. In a similar vein, Hon'ble Tribunal in 1996 (17) RLT 113 (T) = 1996 (67) ELT 319 in the case of Indo Swiss Time Ltd., has held that even for second hand machinery imports, Invoice Price cannot be rejected on mere suspicion.

8. In the case of CC Vs. Nippon Bearings reported in 1997 (69) ECR 255 (S.C.), Hon'ble Tribunal laid down the decision that if invoice value to be disputed, then Department should show contemporaneous imports. However, in this case facts covered import of bearings and not second hand machinery.

9. However, in the case of Shree Rajendra Mills Ltd. as reported in 1997 (71) ECR 215 (Tri.) this very Tribunal (SRB) have clearly laid down that valuation of second hand machinery be accepted under Section 14 read with Rule 4, unless investigation showed that the transaction was not a normal transaction. The valuation on the basis of value of new goods and 70% depreciation has been rejected. This is on all fours with present facts.

10. We find that in view of aforesaid discussions, the law has now evolved on valuation of second hand machinery imported as follows :-

(i) That second hand imported machinery valuation is normally to be done on the basis of Section 14 read with Rule 4 i.e. being second hand machinery ipso facts, does not mean that the transaction value under Rule 4 ibid is to be discarded per se; and

(ii) That further when a Chartered Enginee