New rule to fix import duty on capital goods
Taking note of long-pending demand from trade bodies seeking a rational duty structure on the import of used capital goods, the government has revised its guidelines for determining the customs duty on imported second hand machinery. “All imports of second-hand machinery/used capital goods shall be ordinarily accompanied by an inspection/appraisement report issued by an overseas chartered engineer or equivalent, prepared upon examination of the goods at the place of sale,” the Central Board of Excise and Customs said in a circular. As per the new norm, importers can obtain inspection/appraisement report of the second-hand machinery from any chartered engineer listed in the panel of the customs department. “No custom house shall require any importer to have an inspection/appraisement report of second hand machinery from a particular chartered engineer. The importer shall be free to select any chartered engineer, empaneled by the custom house for the respective class of goods, if so required,” the circular said. On the valuation using general ‘computed value method’ which is based on the cost of production of the goods, the CBEC said that it is not possible to calculate assessable value of the second-hand capital goods based on the cost of production, since used capital goods are not manufactured as such. Therefore, given the nature of challenges in computing the value of second hand machinery, it is felt that it is necessary to obtain inspection/ appraisement reports from qualified neutral parties, the circular added. The report issued by chartered engineers or their equivalent based in the country of sale shall also be accepted by all the customs houses. If an importer is unable to produce inspection report in the prescribed format from the country of sale, the importer shall be free to engage the services of inspection agencies / select any chartered engineer from those empanelled by the custom house “available at the port of import”. The importer failing to procure an overseas report may also have the goods inspected by any one of the agencies in India, as are notified by the DGFT (Directorate General of Foreign Trade). At those customs stations where agencies notified by DGFT are not present, importers may roped in empaneled chartered engineers. However, the value declared by the importer shall be examined with respect to the report of the engineer and similarly the declared value shall be examined with respect to the depreciated value of the goods determined. If such comparison does not create any doubt regarding the declared value of the goods, the same may be appraised and if there are significant differences arising then importer is required to provide explanation justifying the declared value. The proper officer may then evaluate the evidence put forth by the importer and after giving due consideration to factors such as depreciation, refurbishment or reconditioning (if any), and condition of the goods.
October 26, 2015 | 4:33pm IST.
to success.