2016 (2) TMI 615 - AT - Customs

Valuation - loading on the goods imported from their related supplier by the Special Valuation Branch - inclusion of value towards design and drawing fees - The appellant amended the collaboration agreement by deleting the clause relating to payment of design and drawings. - Held that - it is evident that the invoice price of Euro 1,62,350/- of pumps imported, sold to third parties on High Sea Sale Basis are not comparable goods with the goods imported by the appellants @ Euro 1,49,000. The rejection of declared price and loading EURO 1,62,350 ordered by the authority is not sustainable. We hold that the declared value of the pumps imported is the correct transaction value. - Loading of value rejected - Decided in favor of assessee. Loading of Technical Know how fees to the Transaction value of imported goods - Held that - the development cost already included in the Transaction value of imports of 27 units is not liable to be added to the Transaction value of imported goods. Since the agreement is effective from January 2012 the Technical know how fee cannot be added to the imports made in 2011 and not applicable to other models as well other than the pumps model S36X. - the original authority ordering of loading of Technical know how fee of Euro 720,000 to the Transaction value of 76 Nos Pumps under Rule 10 (1) (c) is not sustainable and not backed with any evidence. - Decided in favor of assessee.

Issues Involved:
1. Enhancement of the value of Model S 36X pumps.
2. Loading of Technical Knowhow fees to the Transaction value of imported goods.
3. Loading of service fees paid to the overseas supplier towards rendering various services.
4. Provisional assessment and 5% Extra Duty Deposit (EDD) ordered by the Commissioner (Appeals) for future imports.

Detailed Analysis:

1. Enhancement of the Value of Model S 36X Pumps:
The adjudicating authority rejected the declared value of the pumps and enhanced the value based on the price of pumps imported and sold by the appellants to third parties on a high sea sale basis. The appellant contended that the goods imported and sold to third parties were fully assembled pumps with pump kits, whereas their imports were without pump kits, which they manufactured indigenously. The Tribunal found that the description, model numbers, and weights of the goods in the invoices were different, confirming that the pumps sold to third parties were complete with pump kits. The declared value of the appellant's imports was held to be the correct transaction value, and the enhancement ordered by the authority was set aside.

2. Loading of Technical Knowhow Fees to the Transaction Value of Imported Goods:
The adjudicating authority loaded the Technical Knowhow fee of EUR 720,000 paid to the overseas company towards the transfer of technical knowhow relating to the manufacturing of SCHWING Concrete Boom Pump Model S36. The appellant argued that they had already included the development cost of EUR 12,000 per unit in the invoice price and paid customs duty on the total price, including the technical knowhow fee. The Tribunal found that the development cost had already been included in the transaction value of the imported units, and the same could not be loaded again. The loading of the Technical Knowhow fee was set aside.

3. Loading of Service Fees Paid to the Overseas Supplier Towards Rendering Various Services:
The adjudicating authority ordered the loading of service fees paid to the overseas supplier on the grounds that both parties were related and the service charges were related to the import of goods. The Tribunal found that the service charges were related to post-manufacturing activities and had no nexus to the import of goods. The payments made towards these services were not connected to the import of pumps. The Tribunal relied on the Supreme Court decision in CC Chennai Vs Toyota Kirloskar Motor Pvt. Ltd., which held that technical assistance fees related to post-import activities. The loading of service charges to the transaction value was set aside.

4. Provisional Assessment and 5% Extra Duty Deposit (EDD) Ordered by the Commissioner (Appeals) for Future Imports:
The Commissioner (Appeals) upheld the original order but also ordered provisional assessment and 5% EDD on future imports until the finalization of demands on past imports. The Tribunal found that this direction was beyond the scope of the original order appealed by the appellant. It was noted that the Commissioner (Appeals) had previously granted a stay and waiver of pre-deposit, stating that the appellant had a long-standing track record of imports and exports. The Tribunal set aside the order directing provisional assessment and the collection of 5% EDD for future imports.

Conclusion:
The Tribunal directed the authorities to finalize all assessments covered in the disputed period by accepting the transaction value declared by the appellant. The impugned order was set aside, and the appeal was allowed with consequential relief.

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