Customs cannot enhance used-machinery values on unsupported expert estimates and unverified overseas price information.

Agarwal Graphic Machinery imported used offset-printing machines through 28 Bills of Entry during 2007. Customs examined the machines and enhanced their declared values before clearance.

After a DRI search in January 2008, a show-cause notice dated 22 May 2012 alleged undervaluation of 39 machines: 27 seized machines, 11 previously imported and sold machines, and one provisionally assessed machine. The Commissioner redetermined values, confirmed differential duty, ordered confiscation with redemption fines, and imposed penalties on the company, its directors and Chartered Engineers.

Whether the Revenue established a lawful and evidential basis to reject the values previously assessed by Customs and redetermine the values of the used machines?

Whether the evidence relied upon—including overseas enquiry material and technical experts’ reports—was reliable, and whether refusal of cross-examination vitiated the adjudication?

Whether confiscation could be sustained without a notice under Section 124 of the Customs Act, 1962, and whether redemption fines could be imposed on machines unavailable for confiscation?

Whether the differential-duty demands were barred by limitation, and whether penalties on the company and its directors could survive?

Section 28 of the Customs Act governs recovery of duty not levied or short-levied, whereas Section 124 requires notice and an opportunity to respond before confiscation; the two provisions serve distinct purposes.

Section 111(m) concerns goods that do not correspond in value or other particulars with the import entry, while Section 125 provides for redemption fine in lieu of confiscation.

Rejection and redetermination of transaction value must comply with the applicable Customs Valuation Rules; the Tribunal considered Rule 8 of the 1988 Rules and Rule 9 of the 2007 Rules.

The extended limitation period cannot be invoked merely because a later valuation differs where material particulars were disclosed and Customs assessed the goods at import.

The Tribunal also relied on Hiseins Exim v. The Additional Commissioner for the distinct functions of Sections 28 and 124, Shiv Kripa Ispat Pvt. Ltd. for the rule that redemption fine cannot be imposed where goods are unavailable and were not cleared under bond or undertaking, and Suraj Impex v. Commissioner of Customs on limitation following prior Customs assessment.

The Tribunal found that the overseas enquiry material was not adequately documented: the relied-upon Brussels letter did not identify the Bills of Entry or machines, explain the enquiry, or substantiate the stated values, and other claimed COIN enquiries were not produced.

The printing-technology experts’ reports did not disclose the experts’ qualifications, a valuation methodology, or a basis for the approximate values; the Tribunal therefore rejected them as evidence of enhanced value.

The appellant’s request to cross-examine those experts had also been ignored.

For the 27 seized machines, no notice under Section 124 seeking confiscation had been issued.

For the 11 machines already sold, the Tribunal found no basis for confiscation or redemption fine, including because the goods were unavailable and had not been cleared under bond.

The one provisionally assessed machine had not first been taken through finalisation of its assessment, and the valuation evidence was insufficient in any event.

Finally, because the imports had been assessed by Customs and undervaluation was not corroborated, the Tribunal found no basis for suppression or extended limitation; it also found certain demands beyond five years.

It set aside the confiscations and redemption fines, the penalties on the importer and the two director-appellants, and the impugned order. The appeals were allowed, with consequential relief, if any, in accordance with law.