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TMI Blog2021 (12) TMI 970X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement with the supplier of the replacement engine provides for 'security deposit' as a prerequisite for sending it to M/s Futura Travels Ltd and that US$ 147 per 'flying hour' was chargeable during its deployment on the aircraft. According to the importer, the amount actually paid to the overseas supplier at the time of import is the transaction value on which duty was to be levied while Revenue contends that the value is to be ascertained as for an engine brought into the country permanently. 2. M/s Futura Travels Ltd had procured one 'Raytheon Beechcraft 190D PT 6A' aircraft in May 2005 and was granted statutory permissions by the Directorate General of Civil Aviation, the regulatory authority, subject to 'time between overhauls (TBO)' being not more than 6000 'flying hours' and, as overhaul of both engines was imminent, they had approached M/s Pratt & Whitney Canada Pte Ltd who arranged for the service to be undertaken at their Australia facility for which agreement no. FTL/EXP/S74/01-11 dated 7th April 2009 was entered into. The arrangement involved the supply of one substitute engine for use when two engines (serial no.PS-0312 and PS0310) were being overhauled in Australi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which freight (US$ 2965), insurance (1.125%) and landing charges (1%) was applied before adding the rental invoiced at US $ 18,727.80 and US $ 24,255.00 for revising the value to Rs. 82,05,112.36 on which Rs. 13,90,202 was determined as duty liability. The confiscation of goods under section 111 of Customs Act, 1962, which was permitted to be redeemed on payment of fine of Rs.1,70,000, and imposition of penalty of Rs. 20,000 under section 112 of Customs Act, 1962 is also under challenge. Though classification was also sought to be altered from tariff item 8803 3300 to tariff item 8411 2100 of First Schedule to Customs Tariff Act, 1975, the benefit of notification no. 21/2002-Cus dated 1st March 2002 rendered it inconsequential. 5. Revenue, aggrieved by the assessment at the option price, seeks adoption of the replacement value of US $ 909563/- in the agreement. M/s Futura Travels Ltd contends that US$ 25,000/- paid to the overseas supplier should be the assessable value. 6. According to Learned Counsel for the appellant-importer, the transaction value must necessarily be adopted for the purpose of assessment. He contends that there is no evidence of any additional consideration a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. That the replacement engine was not imported for permanent deployment in India is not in dispute. Doubtlessly, it is the usage for a time that is of commercial import in the transaction; nonetheless, the usage arises from deployment of goods which are imported. The central provisions for assessment - determination of rate of duty, under section 12 of Customs Act, 1962, and of valuation, under section 14 of Customs Act, 1962 - read in conjunction, and separately, do not acknowledge duration of use as relevant and the mechanism for any adjustment on that score lies elsewhere, viz., against claim for drawback under section 74 of Customs Act, 1962 upon re-export or by recourse to abatement afforded by notification no. 27/2002-Cus dated 1st March 2002 issued under section 25 of Customs Act, 1962. The rate of duty is not in dispute here and, hence, the present proceeding is limited to the differential duty arising from the finding on the valuation to be adopted and the penal consequences of mis-declaration. The amounts paid to the supplier of replacement engines is US$ 25,000 against invoice raised towards security deposit for supply (on which duty liability was discharged) and U$ 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial terms of payment are not 'transaction value' for assessment. Assessable value will have to be determined in accordance with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. 10. The Rules provide for substitution by 'transaction value' declared in comparable situations, computation of costs and, as a last resort, to best judgement. This is no carte blanche; the guiderails of 'transaction value', the 'gold standard' for valuation in the 1988 version of the Rules and the concept in the version extant since 2007, are not to be crossed over. The value adopted by the adjudicating authority and the value pressed for in the appeal of Revenue must be aligned within; as the residuary rule cited for validating appropriateness is not in question, it is the one most in conformity that should prevail. 11. The replacement value denominated in the agreement is contingent upon occurrence of certain circumstances which are farthest from the intent of the two contracting parties; this is evident from the prompt dispatch of the 'replacement engine' in terms of the agreement. For that to crystallize within the purview of 'transaction value', the contingent circumstanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importantly, value computed in accordance with residual method must necessarily be on the basis of data available in India and that does not appear to have been considered in the impugned order. Thus, with none of the three values presented before us, viz., that declared by importer, that proposed by Revenue and that adopted by the adjudicating authority, being consistent with section 14 of Customs Act, 1962 and our lack of wherewithal to adjudicate an 'assessable value', the determination of assessable value will have to be entrusted back to the original authority. 13. The appellant has also contended, both before us and in adjudication proceedings, that the demand is barred by limitation of time prescribed in section 28 of Customs Act, 1962. That plea was not accepted by the original authority and, not surprisingly, as ascertainment of jurisdictional competence on that score is rarely ventured upon by adjudicating authorities who are inclined to regard limitation as a superfluous fetter of rule of law deserving no more than a cursory dismissal. 14. The show cause notice, issued on 4th November 2010 in relation to goods imported on 1st August 2009 and beyond the normal period o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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