TMI Blog2010 (10) TMI 319X X X X Extracts X X X X X X X X Extracts X X X X ..... w that valuation of second-hand goods cannot be made on a comparison with other second-hand goods - The conversion cost in respect of the vehicles imported by the appellant was US $ 31,000 whereas that incurred in the case of the vehicle covered by contemporaneous Bill of Entry was US $ 50,200 - the transaction value would reflect the basis of the assessable value of the goods under Section 14 of the Customs Act, in the absence of evidence against acceptability of that value Regarding concessional rate - Commissioner’s decision on the applicability of Notification No. 21/2002-Cus. would not get altered in the context of de novo consideration of the classification issue - The appeal is disposed of in - C/812/2009 - A/349/2010-WZB/C-II/(CSTB) - Dated:- 7-10-2010 - S/Shri P.G. Chacko, M. Veeraiyan, REPRESENTED BY : Shri P.A. Augustian, Advocate, for the Appellant. Shri V.K. Singh SDR, for the Respondent. [Order per : P.G. Chacko, Member (J)]. - This appeal filed by the importer is against the following order of the learned Commissioner of Customs: 12. I accordingly order as follows : (a) The imported car is appropriately classifiable under CTH 870 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle with original seating capacity of five and therefore classifiable under CTH 8703 23 99 which attracted basic customs duty @ 100% and also required specific licence for importation. The customs authorities further found undervaluation of the vehicle. According to them, the value of the vehicle was liable to be enhanced to Rs. 54,62,939/- on the basis of the value of a contemporaneous import from New Zealand. The contemporaneous import of a similar car (CHRYSLER 300 C, Stretched Limousine from New Zealand) was covered by Bill of Entry No. 779278 dated 11-2-2009 wherein the declared value was US $ 1,07,000 equivalent to Rs. 54,62,939/-. Having found old/used car having been imported without licence and also having found misdeclaration of value, the customs authorities held the vehicle to be liable to confiscation under Section 111(d) and (m) of the Customs Act and also held the importer to be liable to penalty under Section 112 of the Act. Though, they had agreed to have the car provisionally released on condition of payment of duty, execution of bond and furnishing of bank guarantee, the importer did not exercise the option for provisional clearance. Subsequently, in a show-caus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the appellant has not adduced any evidence to the contra. In the circumstances, the vehicle can only be held to be second-hand or used vehicle with all its implications for the appellant. We have found substance in the submission of the learned SDR. Admittedly, the vehicle after its importation to the UK remained in that country for about a year, which is evidenced by the documents available at pages 105-107 which are UK registration certificate dated 31-1-2008 and the United States entry document dated 29-12-2008. As rightly pointed out by the learned SDR, it is difficult to believe that the vehicle was not in use in the UK between the date of its registration and that of its re-export to the United States. It is also pertinent to note that, in the UK, during the material period, it was not necessary that the registered keeper of the vehicle should be the legal owner. This legal position is clear from the entry which we have found in the UK registration certificate which reads thus: The registered keeper is not necessarily the legal owner . It would thus appear that an user of vehicle in the UK was also entitled to be its registered keeper. In any case, the appellant has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appended to Chapter 87 of ITC-(HS) Classification framed in terms of Para 2.1 of the Foreign Trade Policy 2004-09. The learned counsel has challenged this finding of the adjudicating authority by submitting that what was imported by the appellant was a new vehicle, to which the Import Licensing Note referred to by the learned Commissioner was not applicable. The learned counsel has also pointed out that the appellant had produced a Type Approval Certificate of an accredited agency from the UK in terms of Import Licensing Note 7(b) as amended by Notification No. 56/RE-2008/2009 dated 11-7-2008. It is submitted that the said certificate certified compliance with all the ECE Regulations for the complete vehicle. It is submitted that, as the appellant complied with the requirements in terms of Import Licensing Note 7 in respect of the vehicle in question, which according to the appellant, was a new vehicle, the Commissioner s decision to confiscate it in terms of Section 111(d) of the Customs Act cannot be sustained in law. The learned SDR has reiterated the plea that what was imported by the appellant was a secondhand/used vehicle. We have already held the vehicle to be a second-han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods imported from two different countries and, therefore, the subject vehicle cannot be valued on the basis of the so-called contemporaneous import. 11. We have considered the submissions. We have already held that the car imported by the appellant is a second-hand/used vehicle. It is settled law that valuation of second-hand goods cannot be made on a comparison with other second-hand goods. Each second-hand goods is uniquely placed and factors affecting its value cannot necessarily be true for other second-hand goods. In the present case, the learned Commissioner determined the assessable value on the basis of the value of similar vehicle imported from New Zealand. As rightly pointed out by the learned counsel, imports from different countries cannot be compared for purposes of Rules 4 and 5 of the Customs (Valuation) Rules, 2007. Moreover, with reference to conversion cost also, we have not found any comparability of the two vehicles. The conversion cost in respect of the vehicles imported by the appellant was US $ 31,000 whereas that incurred in the case of the vehicle covered by contemporaneous Bill of Entry was US $ 50,200. Indisputably, this widely different conversion cos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises is how should the Assessing Officer examine this aspect? Can he do this by requiring the assessee to transport or fill up the vehicle with 10 persons including the driver and come to the conclusion that the vehicle has been designed for 10 persons? Obviously, the answer would be NO . Since the Assessing Officer cannot be said to be having the expertise which is required to consider this aspect. Further, there are so many variables when 10 persons are loaded in the vehicle. The actual number of persons that can travel in a vehicle is not really relevant for the purpose of deciding whether a vehicle has been designed to carry that many persons. It is usual to find that a large number of people (much more than the capacity of the vehicle certified) travelling in vehicles in India. A bus, which is supposed to carry 50 persons often, carries more than 100 persons in this country. The cars, which are designed to carry 5 or 6 persons, carrying more than 10 persons are not rare to be seen. Therefore, as a lay man an Assessing Officer cannot decide whether a vehicle has been designed to carry 10 persons. In such a situation, naturally the Assessing Officer would ask the manufacturer h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d are followed in the country. Once a vehicle is certified by ARAI or VRDE as the vehicle designed for the transport of 10 persons or more including the driver, the classification claim has to be accepted and approved. But if no such expert concurrence is available or if they have not certified the requirement of the tariff heading as is the case, assessing officer has to consider whether he can decide the seating capacity himself or he needs expert assistance. If provisions of law are simple and do not need expertise, assessing officer himself can decide whether vehicle fulfills the condition. 15. In his rejoinder, the learned counsel submits that the Hon ble Supreme Court has granted stay against the above decision of the Tribunal. He has also produced a copy of the relevant Order dated 8-2-2010 in Civil Appeal No. 957/10 filed by Mahindra Mahindra Ltd. [2010 (250) E.L.T. A111 (S.C.)] against the CESTAT Final Order dated 7-12-2009, which reads thus: Issue notice, returnable within two weeks. Mr. B.K. Prasad, learned Advocate, accepts notice. As far as interim stay is concerned, we are hereby granting ad interim stay restraining the Department from taking any coercive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21/2002-Cus. would not get altered in the context of de novo consideration of the classification issue. Further, it goes without saying that, on the classification issue, the party shall be given a reasonable opportunity of being heard by the Commissioner after obtaining expert opinion as aforesaid and furnishing a copy thereof to the party. As to quanta of fine and penalty : 18. We have already accepted the declared value of the vehicle (Rs. 35,50,545/-). The redemption fine of Rs. 14 lakhs imposed by the Commissioner in lieu of confiscation of the car is apparently based on the enhanced value determined by the Commissioner. This fine was imposed in terms of both Section 111(d) and (m) of the Customs Act. Now that we have dropped the charge under Section 111(m) of the Act, and have accepted the declared value of the vehicle, the redemption fine is bound to be reduced as well. Accordingly, we reduce the quantum of fine under Section 125 of the Act to Rs. 5,00,000/- (Rupees Five lakhs only). Proportionately the penalty on the appellant has also to be reduced from Rs. 5.00 lakhs to Rs. 2.00 lakhs (Rupees Two lakhs only) under Section 112(a) of the Act. 19. In the result, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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