2003 (11) TMI 373 - AT - Central Excise

Summary

Issues: Valuation of imported machine for refund of customs duty.

Analysis:
1. The appeal focused on the valuation of a mosquito coil making machine imported by a company, with the claim for refund of excess customs duty paid being the central issue.
2. The machine was imported from Bangladesh, and the declared value was US $25,000 for a set of parts comprising the machine.
3. The dispute arose from a joint venture agreement between the importer and the supplier, where the supplier was entitled to equity shares in the importer company in return for supplying the machines and know-how.
4. The customs department valued each machine at Rs. 36,81,793 based on the joint venture agreement, including an additional amount for the know-how provided.
5. The importer claimed a refund, stating that the joint venture agreement had been terminated, and hence, the enhanced value should not apply.
6. The Commissioner (Appeals) allowed the refund, emphasizing that the additional amount was not paid due to the termination of the agreement.
7. The department's appeal argued that the shares allotted to the supplier were a condition for supplying the machinery and know-how, as per the agreement.
8. The Tribunal examined the details of the know-how provided by the supplier and the lack of a separate value for the know-how in the agreement.
9. It was noted that the cost of the machine was distinct from the cost of the know-how, and the disproportion in costs did not raise suspicion.
10. The Tribunal found the Essar Gujarat judgment irrelevant to the case, emphasizing that the cost of know-how is not included in the machine's value unless it is a condition of sale.
11. The finding that the know-how was not supplied, leading to the contract termination, was undisputed, and the cost of know-how would not impact the machine's assessable value.
12. Ultimately, the Tribunal dismissed the appeal, stating there was no ground for interference in the valuation issue, and upheld the decision to allow the refund of excess customs duty paid.