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2016 (9) TMI 361 - AUTHORITY FOR ADVANCE RULINGS

2016 (9) TMI 361 - AUTHORITY FOR ADVANCE RULINGS - 2016 (340) E.L.T. 443 (A. A. R.) - Procurement and import of technical equipment on lease - classification - Chapter 85 of First Schedule of the Customs Tariff Act, 1975 - Chapter 90 of First Schedule of the Customs Tariff Act, 1975 - Whether the applicant is eligible to claim the exemption under Notification No. 27/2002-Cus dated 01.03.2002 as amended by Notification No. 27/2008-Cus dated 01.03.2008 under the category of temporary import of lea .....

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ation - declared value - book value - depreciated value - Held that: - It is clearly mentioned in CBEC Circular No. 25/2015-Cus that value declared by the importer has to be examined with report of Chartered Engineer as also with the depreciated value arrived in terms of said CBEC Circular dated 19.11.1987. In case, there are significant differences from such comparison, proper officer of Customs will seek explanation from the importer for justification of declared value. If proper officer is no .....

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ereinafter also referred to as applicant) is a resident private limited company. The applicant is a wholly owned subsidiary of Production Resources Management ( PRM ), of which the ultimate parent company is Broadcast Solutions ( BS ). BS engaged, inter alia, in the business of providing broadcasting related and production services including providing broadcasting equipment on rental basis to various customers throughout the globe. The applicant is in the process of setting up its business of pr .....

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porting parts of the broadcasting equipment ( Broadcasting Equipment ) classifiable under Chapter 85 or Chapter 90 of First Schedule of the Customs Tariff Act, 1975 on lease from various vendors. Applicant proposes to procure and import the said Broadcasting Equipment, inter alia, in the following manner:- a Model A: In terms of Model A, the applicant will be taking the said Broadcasting Equipment from BS on lease basis. BS itself has a repository of equipment of various specifications which hav .....

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. At the time of import of the said Broadcasting Equipment, the applicant proposes to provide the following documentation with respect to the aforementioned Models in order to justify the value declared for the purpose of levy of Customs Duty:- i. Chartered Engineer s Certificate certifying the description of the said equipment, price of the new equipment as in the year of its manufacture, current C.I.F. Value of the equipment, period of usage etc.; ii. Chartered Accountant s certificate showing .....

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equipment or tools falling under Chapter 84,85,90 or any other Chapter of the Tariff are eligible for the exemption subject to the limitation and conditions specified therein. 5. Applicant has raised following questions for ruling by this Authority: A. Whether the applicant is eligible to claim the exemption under Notification No. 27/2002-Cus dated 01.03.2002 as amended by Notification No. 27/2008-Cus dated 01.03.2008 under the category of temporary import of leased goods? B. Whether the value .....

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of Notification No. 27/2002-Cus dated 01.03.2002, as amended by Notification No. 27/2008-Cus dated 01.03.2008 can be extended provided; i. The importer should have taken the goods on lease; ii. The importer makes a declaration that the goods are imported temporarily for execution of a contract; iii. The goods imported in terms of the exemption are re-exported within three months from the date of import or within an extended period but not exceeding 18 months from the date of the said import with .....

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t re-exported within the stipulated period. 7. Applicant submits that he would be satisfying all the conditions of Notification No. 27/2008-Cus dated 01.03.2008, as amended, therefore they are eligible to claim benefit of same. Revenue also has no objection. We have examined the provision of said notification with the plea made by the applicant. We are also in agreement that benefit of Notification No. 27/2002-Cus, amended by Notification No. 27/2008-Cus, shall be available to the applicant. 8. .....

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ation ought to be adopted on the basis of available data; that therefore where the Chartered Engineer s Certificate clearly provides for the value ascribed to the said imported equipment, it ought to be adopted for the purpose of levy of Customs Duty under the Act. Applicant further submits that even with respect to the independent third party vendors, the import invoice will be well supported by the Chartered Engineer s Certificate which will categorically certify the description of the second- .....

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import of the said Broadcasting Equipment on the basis of invoice received from BS as well as third party vendors ought to be considered as the transaction value for the purpose of levy of concessional rate of Customs Duty. Book Value shown in the books of Accounts of the Overseas Vendors ought to be adopted for the purpose of Customs Valuation. 9. Applicant submits that in any event and without prejudice to the submissions that the Chartered Engineer s certificate ought to be taken as the basis .....

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ose of Customs Valuation. In this regard, applicant refers to the Circular No. 4/2008 dated 12.02.2008 issued by the Central Board of Excise and Customs, wherein, it is clarified that where the Transaction Value is rejected, in the case of a second-hand machinery, valuation can be done on the basis of value of the new machine, as certified by the Chartered Engineer and scaled down by allowing depreciation commensurate with the period of usage; that in the present case, in the event that the Tran .....

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l not be capped to 70% as mentioned in the said Customs Circular; that the depreciation policy prescribed vide Circular No. F. No. 493/124/86-Cus VI, dated 19.11.1987 cannot be made applicable to the present case as the broadcasting equipments imported by the applicant would have substantially undergone price change due to change in technology and value ought to be calculated in accordance with the principles of depreciation applicable to similar high-end equipment. 11. Revenue submits that valu .....

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Determination of Value of Imported Goods) Rules, 2007 under Residual Method . Rule 9 ibid inter-alia states that where the value of imported goods cannot be determined under the provisions of any of the proceeding rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and on the basis of data available in India. 13. It is observed that CBEC vide Circular No. 25/2015-Cus dated 15.10.2015 issued guidelines for valuation of s .....

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n the event of the importer failing to procure an overseas report of inspection / appraisement of the goods, he may have the goods inspected by any one of the agencies in India, as are notified by the DGFT under Appendix 2G of the Handbook of Procedures (HBoP) 2015-20 and Aayat Niryat Forms to FTP 2015-20, as amended from time to time (para 2.59 of Handbook of Procedures 2015-20 refers). (d) At the customs stations where agencies notified by DGFT are not present, importers may continue to avail .....

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ircular No. 493/124/86-Cus VI, dated 19-11-1987[ 2014(300) E.L.T. (T5) and dated 4.1.1988 [2008 (222) E.L.T. (T15)]. If such comparison does not create any doubt regarding the declared value of the goods, the same may be appraised under Rule 3 of the CLVLR, 2007. If there are significant differences arising from such comparison, Rule 12 of the CVR, 2007 requires that the proper officer shall seek an explanation from the importer justifying the declared value. The proper officer may then evaluate .....

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