2021 (1) TMI 1217 - AT - Customs

Valuation of imported goods - loading of charges towards manuals, software, installation and commissioning of the plant to the value of the imported goods - Zero Duty EPCG scheme - rejection of discount and loading of invoice value - HELD THAT - In the present case, both in the quotation as well as purchase order, the charges for installation and commissioning have been separately shown by the assessee. Thus, it is seen that for the activities undertaken after importation of the goods need not be included in the invoice value when the cost of such service/activity is shown separately. It is therefore clear that the charges which are for services undertaken after import cannot be loaded into the invoice value. The loading of charges towards manuals, software, installation and commissioning of the plant to the value of the imported goods is against provisions of law and not sustainable. The gross amount quoted, the discounts offered and the final price of each vendor has been reproduced in this paragraph by the Commissioner (Appeals). On the basis of these facts, he has concluded that there is a practice of quoting a higher price and offering discounts to arrive at the final price in the industry - Though the department contends that the discount offered is on the higher side, there is no evidence adduced by them to support their contention. For this reason, there are no grounds to deviate from the view taken by the Commissioner (Appeals) on this issue. The impugned order requires to be set aside with regard to the loading of manuals, software, installation and commissioning charges to the invoice value - Commissioner (Appeals) in setting aside the rejection of discount and loading of 46.89% to the invoice value is legal and proper - Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Loading of charges towards manuals, software, installation, and commissioning of the plant to the value of imported goods.
2. Rejection of discounts and loading of value to the invoice value.

Analysis:
1. Loading of Charges:
The assessee imported capital goods under the Zero Duty EPCG scheme from a related entity, leading to an investigation by the Special Valuation Branch of Customs House. The original authority directed the loading of invoice value by 46.89% and addition of charges towards manuals, software, installation, and commissioning of the plant. The Commissioner (Appeals) partly allowed the appeal, upholding the loading of charges but setting aside the loading of invoice value. The Tribunal considered the charges for post-importation activities separately shown in the quotation and purchase order. Referring to the Interpretative Notes, it concluded that such charges should not be included in the invoice value. Citing precedent cases, the Tribunal dismissed the loading of charges towards manuals, software, installation, and commissioning of the plant.

2. Rejection of Discounts and Loading of Value:
The department appealed against the setting aside of the rejection of discounts and loading of value by the Commissioner (Appeals). The Tribunal noted the absence of evidence supporting the original authority's claim of abnormal discount. The Commissioner (Appeals) analyzed quotations from different vendors, highlighting the industry practice of offering discounts. As the department failed to provide evidence contradicting the discounts offered, the Tribunal upheld the Commissioner (Appeals)' decision. Consequently, the Tribunal allowed the assessee's appeal regarding the loading of charges and upheld the decision on the rejection of discounts and loading of value. The department's appeal was dismissed.

In conclusion, the Tribunal set aside the loading of charges towards manuals, software, installation, and commissioning of the plant to the invoice value. It upheld the decision of the Commissioner (Appeals) on rejecting discounts and loading of value, dismissing the department's appeal.