2026-VIL-1758-CESTAT-KOL-CU
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CUSTOMS CESTAT Cases

Customs – Valuation of old and used machinery – Redetermination on overseas enquiries and expert opinion – Appellant imported old and used printing machines, which were examined, valued by Chartered Engineers and cleared on payment of duty on enhanced assessable values, and the Respondent later rejected the values and redetermined them under the Customs Valuation Rules on the basis of values received through COIN offices and the report of two experts of an Institute – Appellant contended that the redetermination was arbitrary and that its request for cross-examination of the experts was ignored – Whether the redetermination of value and the consequent differential duty on the seized machines, the machines cleared earlier and the machine cleared provisionally are sustainable – HELD – Of the enquiries claimed with several COIN offices, only a single letter was produced, which had no reference to the Bill of Entry or the details of the machines and no documentary back up, so its evidentiary value is nil - The expert report did not show the qualification of the experts or the authority of the Institute to determine the price of second-hand machines, and gave an approximate value directly without the original value, usage, present value or method adopted, which makes it a hollow report devoid of any technicality - Ignoring the request for cross-examination of the experts is a blatant disrespect of the principles of natural justice - The re-valuation is arbitrary and without corroborative and cogent documentary evidence, and the differential duty on all the machines is set aside - The machine cleared on provisional assessment was also subjected to a demand without finalising the assessment, and no case of enhancement of value was made out - The appeals are allowed - Customs – Confiscation and redemption fine – Sections 111(m), 124 and 125 of the Customs Act, 1962 – Seized machines released provisionally and machines cleared earlier in the normal course – Respondent confiscated the machines and imposed redemption fine on the ground of undervaluation, though a notice under Section 28 alone had been issued – Whether confiscation and redemption fine can be sustained without a notice under Section 124 and for machines not available for confiscation – HELD – Where goods are seized and released provisionally, confiscation requires a notice under Section 124, which serves a purpose distinct from a notice under Section 28 for recovery of duty. No such notice was issued for the machines provisionally released, and confiscation was also based on the undervaluation which stands discarded - The machines cleared earlier after assessment were not available for confiscation and were not shown to be cleared under bond, so no redemption fine can be imposed under Section 125, as held by the Larger Bench - The confiscation and the redemption fine are set aside - Customs – Extended period of limitation – Section 28 of the Customs Act, 1962 – Suppression alleged on the basis of subsequent undervaluation of machines assessed by Customs – Show cause notice invoked the extended period for machines which were examined and assessed by Customs officers with Chartered Engineer's certificates on record, and some Bills of Entry were beyond five years from the date of notice – Whether the extended period was available to the Respondent – HELD – The goods were released after the Bills of Entry were assessed by Customs officials on the basis of Chartered Engineer's certificates which were considered, and hence no suppression can be alleged, particularly as the undervaluation has gone uncorroborated - Where all material particulars are disclosed and within the knowledge of the assessing authority, the extended period cannot be invoked, as it is an exception to the normal rule and cannot compensate for the delay on the part of the Department - The demand under the extended period is time barred and is set aside - Customs – Penalty – Sections 112 and 114A of the Customs Act, 1962 – Penalty on importer and on the Directors, alleged to be concerned in undervaluation – Whether penalties survive where the demand and confiscation have been set aside – HELD – Since the confirmed demands and confiscation are not sustainable, the question of imposing penalty on the importer does not arise, and as the case against the importer does not survive, the penalties on the Directors under Section 112(a) and (b) also do not survive - The penalties and the impugned order are set aside, and the appeals are allowed with consequential relief as per law.
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