2007 (5) TMI 53 - SC - Customs

Valuation(Custom) - Department contended that the technicals and installations fee are required to be added in the assessable value of good(20-Lane Bowling Alley Equipment) imported by the appellant Held that department contention was not correct

Summary

Issues:
Determining whether technical and installation fee should be included in the assessable value of imported equipment.

Analysis:
The case involved an appeal by the Department under Section 130-E of the Customs Act, 1962 against the decision of the Tribunal regarding the inclusion of technical and installation fee in the assessable value of a 20-Lane Bowling Alley equipment imported by the assessee. The Department alleged that the assessee had undervalued the equipment and disguised part of the cost as Technical and Installation Fee. The Adjudicating Authority confirmed the demand, stating that the equipment was undervalued and the cost was artificially divided to evade customs duty. The Authority invoked Rule 5(1)(c) of the Customs Valuation Rules to calculate the duty amount. The Tribunal, however, found no undervaluation and allowed the appeal, citing a previous judgment and stating that the declared value was a negotiated price. The Supreme Court upheld the Tribunal's decision, emphasizing that the cost per lane was a negotiated price and there was no evidence of under-valuation. The Court also noted that the Technical and Installation Charges Agreement was a revenue generation agreement and not related to the sale proceeds, thus dismissing the civil appeals filed by the Department.

In conclusion, the Supreme Court found no merit in the Department's argument regarding the inclusion of the technical and installation fee in the assessable value of the imported equipment. The Court highlighted that the transaction was properly negotiated, and the agreement for technical and installation charges was separate from the sale proceeds. The Court emphasized that post-clearance agreements are excluded under the Customs Valuation Rules and ruled that Rule 4(1) of the Rules applied in this case, not Rule 5(1)(c) as invoked by the Department. Therefore, the civil appeals were dismissed, and no costs were awarded.