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2015 (6) TMI 775 - SUPREME COURT

2015 (6) TMI 775 - SUPREME COURT - 2015 (321) E.L.T. 389 (SC) - Valuation of imported machines - Depreciation method in terms of Circular No. 493/124/86-CUS dated 19.11.87 - No sale involved only transfer of goods - Held that:- We find that section 14 of the Customs Act, 1962 deals with valuation of goods for the purposes of assessment.The reading of the aforesaid provision manifests that the valuation of the imported goods is to be arrived at by ascertaining the price at which such or like good .....

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not possible to determine the price at which such goods are ordinarily sold or offered for sale, Rule 8 provides for residual method and stipulates that the value shall be determined using reasonable means consistent with the principles and general provisions of the said Rules as well as provisions of sub-section (1) of Section 14 of the Customs Act.

In the present case, we find that no efforts were made either by the Department or even by the appellant to ascertain the price at whic .....

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d thereafter, it was brought to Nepal, its value as on that date was ascertained. Thus, for that period, it took into consideration the value which was fixed by the Chartered Engineer. Thereafter, for remaining three years, when it was in Nepal and brought to India, depreciation method is adopted.In such circumstances, we do not find any error in applying the circular dated 19.11.87 in the instant case. - Decided against the assessee. - Civil Appeal No. 2610 of 2004 - Dated:- 27-3-2015 - A. K. S .....

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ased certain equipments/ machinery of foreign origin. After the project in Iraq was over, these machineries were sent to Nepal as the same was required for completion of another contract in Nepal. The contract in Nepal was over some time in the year 1990. Since this machinery was not required in Nepal, the appellant decided to import the same to India. For this purpose, Bill of Entry dated 16.02.1990, 28.02.1990, 22.03.1990, 11.04.1990, 16.04.1990 and 13.5.1990 were filed. In these bills of entr .....

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aid formula for arriving at the valuation of these machineries. As per the Department, since no sale was involved, the value of the machineries had to be fixed by applying depreciation method in terms of Circular No. 493/124/86-CUS dated 19.11.87. This Circular provides for the rate of depreciation that has to be applied in the first year, second year, third year and onward etc. However, at the same time, it also mentions that the depreciation has to be subject to an overall limit of 70 per cent .....

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ged the said order by filing the appeal before the Commissioner (Appeals), who, however, dismissed the appeal and passed orders dated 14.08.1992 confirming the aforesaid demand. Further appeal to Custom, Excise & Gold (Control) Appellate Tribunal (hereinafter referred to as 'CEGAT') yielded the same result as the CEGAT has also dismissed the appeal vide orders dated 28.05.2001 by observing as under: - "We have heard the rival submissions. We have also perused the case records. W .....

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hich we are concerned in the present case, reads as under: - SECTION 14. Valuation of goods for purposes of assessment.- (1) For the purposes of the Customs Tariff Act,1975 (51 of 1975), or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or expo .....

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said provision manifests that the valuation of the imported goods is to be arrived at by ascertaining the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation or exportation. Therefore, the method to be employed, as per the aforesaid provision, is to ascertain as to how much would be the price of such goods if they are to be ordinarily sold or offered for sale. In exercise of powers contained under Section 156 of the Customs .....

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d above. It cannot be denied that one of the reasonable method consistent with the principles of valuation would be the depreciation method. In order to ensure that in employing the method of depreciation the authorities do not take divergent views and apply a uniform method, circular dated 19.11.87 has been issued which has been relied upon by the authorities in the present case. The circular reads as under: - "Subject: Valuation of second-machinery and fixation of Scale of depreciation. 1 .....

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......4% 16 (ii) For every quarter during 2nd year............3% 12 (iii) For every quarter during 3rd year.........2.50% 10 (iv) For every quarter during 4th year...........2% 8 Subject to an overall limit of 70% 46 3. It may be pointed out that under the Import Policy, importers of second-hand machinery are required to produce a certificate from a professional independent chartered engineer or any equivalent institute in the country of supply of the machinery. This certificate, inter alia, ind .....

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