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M/s First Concept Production Services Pvt. Ltd., Gurgaon Versus Commissioner of Customs, New Custom, New Delhi

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 leased goods? - Held that: - the benefit of Notification No. 27/2002-Cus dated 01.03.2002 .....

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entioned 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 not satisfied with said justification of the importer, he may proceed to determine the v .....

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pplicant 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 providing support services to various broadcasting companies for conducting sports and e .....

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der 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 have been procured from manufacturers throughout the globe and are owned by BS. The said .....

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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 the current book value of the said equipment. 4. Applicant inter-alia submits that in .....

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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 stated in the Chartered Engineer s Certificate to be provided by the applicant at the .....

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08-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 appropriate permission from the Deputy/Assistant Commissioner of Customs; iv. Where e .....

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sfying 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. Applicant inter-alia submits that said Broadcasting Equipment proposed to be imported .....

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rtered 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-hand machinery, price of the new machinery as in the year of its manufacture, current .....

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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 for valuation of the imported goods, the book value shown in the books of accounts of .....

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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 Transaction Value viz. the invoice value is not accepted, the value of the said Broadcasti .....

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n 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 valuation of second hand machinery needs to be done as per the guidelines issued by CBEC v .....

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bid 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 second hand machinery, which are summed up in paragraph 12 and reproduced below; 12. To .....

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aisement 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 of the services of locally empanelled chartered engineers. (e) In cases where the repo .....

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988 [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 the evidence put forth by the importer and after giving due consideration to factors .....

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