Assessment of imported second hand machinery – CBEC guidelines
Small time illiterate merchants from Haryana regularly import second hand photocopiers and for the last five years, the Customs has been regularly harassing them. These machines are seized with routine regularity in all Customs Stations and value is enhanced and huge Redemption Fine and penalties are imposed. These poor merchants have to routinely hire consultants and fight the case up to the Tribunal to get some relief.
Now the Board has issued instructions on valuation of second hand machinery.
Board has summarised judicial decisions on the issue as:-
1. If other parameters of Section 14 of the Customs Act, 1962 are satisfied, the transaction value method of Rule 3 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 can also be applied to importation of second-hand machinery sold for export i.e. it was imported immediately after sale without any further usage abroad.
2. However if transaction value of Rule 3 is rejected, valuation of second-hand machinery can be done under Rule 9, on the basis of value of new machine, as certified by the Chartered Engineer, and scaled down by allowing depreciation commensurate with the period of usage. Supreme Court judgement in the case of Gajra Bevel Gears [ ] refers in this regard.
3. However, transaction value of Rule 3 cannot be rejected by ab initio application of Rule 9, inasmuch as one cannot, before rejecting transaction value of Rule 3 with sufficient evidences, straightaway arrive at a notional value under Rule 9.
Board has also given some tips on ‘how to reject transaction value'.
Board has further clarified that:-
1. There is no need to specify the agencies whose certificates alone, issued at the port of loading, would be accepted. The number of such agencies should not be limited.
2. In the absence of proper Load Port Certificate, a local Chartered Engineer's certificate may be accepted. Each Custom House may consider issuing Public Notices giving names and addresses of Chartered Engineers, whom the trade can contact for issuance of CE Certificate.
3. It is not essential to have the examination of the second hand machinery by a panel of officers, since in many Customs formations no machinery expert is posted. The routine examination of second hand machinery being done by the Docks staff shall continue.
Board wants these guidelines to be strictly followed.
CBEC Circular No. 4/2008- Cus Dated : February 12, 2008