2001 (12) TMI 710 - AT - Customs

Summary

Issues Involved:
1. Compliance with Notification 339/85 regarding export obligations.
2. Validity and sufficiency of consultancy charges as export earnings.
3. Assessment of contracts and supporting evidence.
4. Role and acceptance of affidavits as evidence.
5. Interpretation of Notification 339/85 conditions for duty-free import.

Issue-wise Detailed Analysis:

1. Compliance with Notification 339/85 regarding export obligations:
M/s. Tata Infotech Ltd. (TIL) was accused of failing to comply with Notification 339/85, which allowed duty-free import of capital goods provided the resultant products were exported with required value addition. The Show Cause Notice alleged that TIL's actual software exports were worth only Rs. 6.9 crores, and consultancy charges of Rs. 7.44 crores could not be considered export earnings for the notification's benefit.

2. Validity and sufficiency of consultancy charges as export earnings:
TIL argued that consultancy exports should be included in assessing export value. The Tribunal, in a previous order, had directed the Commissioner to consider consultancy services and other forms of export fulfillment under the newer Notification 133/94-Cus., which expanded the scope of exemptions. The Commissioner was to ascertain the extent of earnings and correlate them with the imported goods.

3. Assessment of contracts and supporting evidence:
TIL submitted 118 contracts and project profiles to demonstrate compliance. The Commissioner, however, doubted the authenticity of these documents, noting deficiencies such as unsigned contracts and contracts on Mumbai unit letterheads. Despite TIL's submissions, including an affidavit by the Vice President and Chartered Accountant certificates, the Commissioner was not convinced of the correlation between contracts and the NEPZ-installed systems.

4. Role and acceptance of affidavits as evidence:
The Tribunal emphasized that affidavits, especially from senior officials, should not be dismissed lightly without proper inquiry. The affidavit in question detailed the use of imported systems in fulfilling 85 contracts and was supported by other evidence, including Chartered Accountant certificates and remittance records.

5. Interpretation of Notification 339/85 conditions for duty-free import:
TIL's counsel argued that the notification's conditions required accounting to the Development Commissioner, not Customs. The Tribunal found that TIL had provided sufficient evidence of fulfilling export obligations, including consultancy services, and thus met the conditions for duty-free import under the notification.

Conclusion:
The Tribunal concluded that TIL had adequately demonstrated compliance with export obligations through various forms of evidence, including contracts, project profiles, and affidavits. The appeal was allowed, and the impugned order was set aside, recognizing TIL's fulfillment of the conditions for duty-free import under Notification 339/85.