Jeet Ram Kait (T), Members ORDER
P.G. Chacko, Member (J)
1. The appellants had imported nine units of second-hand machinery viz. "Rieter C 1/3 Model Carding. Machines" and sought clearance thereof under a Bill of Entry dated 29-9-2003 wherein the value of the goods was declared as USD 27,000/- (Rs. 12,42,000/-) and its year of manufacture as 1994. On an examination by SUB, the machinery was found to be old and used. The Chartered Engineer, to whom the matter was referred by the Custom House, examined the goods and reported that the machinery had been used for 10 to 15 years. He also assessed its value as Rs. 32,40,000/-. The Custom House also made enquiries with M/s. Rieter LMV Machinery Ltd., Coimbatore, which revealed that Rieter C 1/3 Model Carding Machine was last manufactured in 1982-83 and the approximate value of the new machine was Rs. 14 lakhs. It thus appeared to the Customs authorities that the imported machinery was more than 10 years old, which could not be imported without specific import licence. The appellants could not produce any such licence. The authorities also felt that the goods had been grossly undervalued with intent to evade payment of Customs duty. They held the goods to be liable for confiscation under Section 111 and the importers (appellants) to be liable for penalty under Section 112 of the Customs Act, 1962. The Commissioner upheld this view and passed the following order :-
"(i) I order enhancement of value of used machinery covered under B.E. No. 329105, dated 29-9-03 to Rs. 32,40,000/-, (Rupees Thirty Two Lakhs and Forty Thousand only) (CIF) under Rule 8 of CVR, 1998.
(ii) I also order for the confiscation of the above goods under Section 111(d) and 111(m) of the Customs Act, 1962 read with Section 3(3) of FT (D & R) Act, 1992. I, however, given an option to the importer to redeem the same on payment of a fine of Rs. 4,00,000/- (Rupees Four Lakhs only) under Section 125 of the Customs Act, 1962 and applicable duty payable on the enhanced value.
(iii) I impose a penalty of Rs. 50,000/- (Rupees Fifty Thousand only) under Section 112 of the Customs Act, 1962 on the importer.
(iv) The goods should be redeemed within 30 days from the date of issue of this order or within such further period as may be extended by the Deputy/Assistant Commissioner concerned."
The above order is under challenge in the present appeal.
2. Examined the records and heard both sides. The value of the secondhand machinery was declared by the importer as Rs. 12,42,000/- and the year of manufacture of the goods was declared as 1994. In support of these declarations, the importer had produced a Certificate from the Chartered Engineer of the foreign supplier of the goods. That Certificate certified (i) that the year of manufacture of the machinery was 1994, (ii) the machinery was purchased by the appellants from a dealer dealing in used machinery, (iii) that the residual life of the machine was more than 10-15 years, (iv) that the value of the machinery as on the date of its manufacture was US $ 7,000/- and (v) that, as on the date of its sale as second-hand machine to the appellants, a value of US $ 3,000/- was reasonable. The Commissioner did not accept this Certificate. He rejected the declared value for want of manufacturer's invoice or any other evidence. We note that the Commissioner has accepted the fact that the goods were imported from a dealer and not from a manufacturer, In respect of second-hand machinery imported from a dealer, it could not have been possible, in the normal course, for the importer to produce the manufacturer's invoice. This aspect, it appears, has been overlooked by the Commissioner. The Commissioner ha........