2005 (9) TMI 485 - AT - Customs

Summary

Issues:
1. Whether the amount paid for Engineering & Technology transfer should be added to the assessable value under Rule 9(1)(e) of the Customs Valuation Rules, 1988.
2. Whether the contract for supply of machinery and technical know-how constitutes a single package deal.

Analysis:
1. The appellants applied for registration of their contract under project imports for setting up a plant for Stamping Foils and Metallised packaging. They imported second hand machinery and filed Bills of Entry. The department contended that the amount paid for Engineering & Technology transfer should be added to the assessable value under Rule 9(1)(e) of the Customs Valuation Rules, 1988. The Assistant Commissioner ordered the addition of the amount, which was upheld by the Commissioner (Appeals). The Tribunal noted that the collaboration agreement included supply of machinery and know-how for manufacturing foils. The contract indicated an interrelation between the supply of machinery and technical know-how. The Tribunal agreed that the payments were a condition of sale of the imported goods and should be included in the transaction value as per Rule 9(1)(e). As the grounds of appeal did not provide a basis to challenge this, the Tribunal upheld the decision to add the amount to the assessable value, resulting in the dismissal of the appeal.

2. The contract between the importers and the manufacturer involved a collaboration for manufacturing metallized products, with the manufacturer supplying second hand machinery and know-how. The Assistant Commissioner found that the supply of technology and equipment was related to service, indicating an inseparable link between the supply of machinery and technical know-how in the contract. The Tribunal agreed that the contract represented a single package deal for the supply of machinery and know-how for foil manufacturing. As the grounds of appeal did not contest the nature of the payment as a condition of sale, the Tribunal upheld the lower authority's decision. The appeal was dismissed based on the interrelation between the supply of machinery and technical know-how in the contract.