2009 (2) TMI 103 - HC - Customs

Service charge/license premium paid to obtain addtition licence for import of machine (Bag-O-Matic Press)- includibility in the price paid under high seas agreement for determining transaction value of imported goods held that such payment has a direct nexus on importation as without additional license, importer-appellant was not able to purchase the said imported goods - therefore, such payment is includable in the price of imported goods - held that transaction is attracted u/r 9 of CVR 1988 by applying the principle of attribution appeal dismissed

Summary

Issues Involved:
1. Whether the service charge/license premium of Rs. 12.25 lakhs paid to respondent no. 5 should be included in the transaction value of the imported goods under Rule 9 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.
2. Whether the sum of Rs. 12.25 lakhs can be excluded as a "buying commission" under Rule 9(1)(a)(i).
3. Whether the customs authority should bear the demurrage payable or paid to the Port Trust if the petitioner's contentions are upheld.

Issue-wise Detailed Analysis:

1. Inclusion of Service Charge/License Premium in Transaction Value:
The court examined whether the sum of Rs. 12.25 lakhs paid as a service charge or license premium should be included in the transaction value under Rule 9 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (CVR, 1988). The court noted that the payment was necessary for obtaining the additional license required for the importation of the Bag-O-Matic Press, without which the petitioner could not have purchased the machine. The court concluded that this payment was incidental to the purchase and thus part of the transaction value. The court referenced the judgment in Hyderabad Industry Ltd. vs. Union of India, where the Supreme Court held that service charges realized by an agency are part of the transaction value. Therefore, the court held that the sum of Rs. 12.25 lakhs should be included in the transaction value.

2. Exclusion as "Buying Commission":
The petitioner argued that the sum of Rs. 12.25 lakhs should be excluded from the transaction value as a "buying commission" under Rule 9(1)(a)(i). The court referred to the interpretative note to Rule 9, which defines "buying commissions" as fees paid by an importer to his agent for representing him abroad in the purchase of goods. The court found that the payment in question was not for representing the petitioner abroad but was for securing the additional license necessary for the importation. Consequently, the court rejected the contention that the sum should be excluded as a buying commission.

3. Customs Authority Bearing Demurrage:
The petitioner contended that if their arguments were upheld, the customs authority should bear the demurrage payable or paid to the Port Trust. However, since the court rejected the petitioner's primary contentions regarding the inclusion of the service charge/license premium in the transaction value and its exclusion as a buying commission, this issue did not require further consideration.

Conclusion:
The court dismissed the petition, upholding the customs authority's decision to include the service charge/license premium of Rs. 12.25 lakhs in the transaction value of the imported goods under Rule 9 of the CVR, 1988. The court vacated all interim orders and allowed the customs authority to encash the bank guarantee and realize its dues, including interest, in accordance with the law. The Port Trust was directed to refund any excess amount lying with it to the petitioner. The appeal was dismissed with no order as to costs.