Import Value Cannot Be Re-Determined Solely Based On Local Engineer Certificate: CESTAT Chennai

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal on 25 March held that the declared value of imported second-hand machinery cannot be rejected and re-determined solely on the basis of a local Chartered Engineer's certificate.

A Bench comprising Judicial Member P. Dinesha and Technical Member Vasa Seshagiri Rao allowed an appeal filed by Abirami Weaving Mills against an order of the Commissioner (Appeals), Tiruchirappalli. It held:

“...we are of the view that the redetermination of declared value based solely on local Chartered Engineer's certificate is not in order....”

Abirami Weaving Mills had imported 20 used Picanol rapier looms from Indonesia and declared them at a unit price of USD 4,000. The Department rejected the declared transaction value on the ground that the importer had not initially furnished a proper load port Chartered Engineer's certificate containing complete details such as the year of manufacture, present condition, and value of new machinery.

Consequently, the goods were referred for valuation and, based on a local Chartered Engineer's report, the value was enhanced to USD 7,500 per unit. Abirami Weaving Mills accepted the enhanced value at the time of clearance and paid duty, but subsequently challenged the re-determination.

Before the Tribunal, it contended that a load port Chartered Engineer's certificate had in fact been obtained prior to import and contained all material particulars, including the original value and condition of the machinery.

It also argued that under Section 14 of the Customs Act, the transaction value must be accepted unless there is evidence of extra consideration or a relationship between the buyer and seller, which was absent in the present case. It further challenged the rejection of the load port certificate merely due to the absence of certain details, such as the year of manufacture.

The Revenue, on the other hand, supported the findings of the lower authorities and justified reliance on the local Chartered Engineer's certificate for re-determination of value.

After examining the records, the Tribunal found that there was no dispute regarding the nature of the goods as used machinery and that both the load port and local Chartered Engineer's certificates broadly agreed on key aspects such as the condition and identification of the goods.

The Bench noted that the only deficiency pointed out in the load port certificate was the absence of the year of manufacture, which by itself could not be treated as fatal.

The Tribunal further observed that the Board's circular contemplates reliance on a local Chartered Engineer's certificate only when the load port certificate is absent or found to be unreliable. In the present case, no valid reasons were recorded by the authorities for rejecting the load port certificate. It held that re-determination of value merely on the basis of a local Chartered Engineer's report, without first discrediting the transaction value or the load port certificate, is legally unsustainable. It stated:

"as long as all the particulars of the used machinery is concerned, are available in the said Load Port certificate and the same also does not indicate that the items in question are hazardous in nature, the item in question also has a life span of some years including an approximation as to the present market value, the same should serve the purpose. A small information which may not essentially dislodge the very nature of the goods imported, cannot be fatal to the extent of disbelieving the said Load Port certificate."

Emphasising that minor deficiencies in documentation cannot override substantive evidence regarding the nature and value of imported goods, the Tribunal concluded that the enhancement of value was unjustified.

Accordingly, it set aside the impugned order and allowed the appeal.

For Appellant: K. Ramya, Advocate

For Respondent: Vineet Goyal, Authorized Representative