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2016 (10) TMI 944 - AT - CustomsValuation - assessable value - design and engineering charges - whether design and engineering charges includible in the assessable value for calculation of duty? - Rule of 9(1)(b)(iv) of Customs Valuation (Determination of price of Imported Goods) Rules, 1988 - Held that - reliance placed in the decision of Mahindra & Mahindra V Commissioner Customs 2011 (8) TMI 717 - CESTAT, MUMBAI where it was held that the Tribunal was right in holding that the agreement relating to purchase of equipment cannot be disassociated from other agreements and the authorities were right in loading the design and engineering charges by ₹ 11.50 lakhs owe to the value of the imported equipment under Rule 9 read with Rule 4 of the Customs Valuation(Determination of the Price of Imported Goods) Rules, 1988. Appeal dismissed - design and engineering charges includible in the assessable value for calculation of duty - decided against appellant.
Issues:
1. Inclusion of design and engineering charges in the assessable value of imported machinery under Project Import Regulations, 1986. 2. Adjudication of Show-Cause Notice by Deputy Commissioner of Customs. 3. Rejection of appeal by Commissioner (Appeals). Issue 1: Inclusion of Design and Engineering Charges: The case involved the import of equipment and spares under Project Import Regulations, 1986, for setting up a Palm Oil Mill. The Appellants imported the machinery through Vizag Port under the PIR 1986 concession but faced a show cause notice proposing the inclusion of RM 1,400,000 design and engineering charges in the assessable value. The Deputy Commissioner, in the impugned order, held that the charges should be included as per Customs Valuation Rules. The Appellant argued that the charges were for the entire plant's design, not just the imported goods, and thus should not be included. The Tribunal analyzed the agreements between the parties, emphasizing the obligation for design and technical drawings for the Palm Oil Mill. The Tribunal agreed with the lower authority's decision, citing the clear nexus between the design charges and the imported machinery, as per the purchase order and agreements. The Tribunal also dismissed the Appellant's reliance on case laws with different facts, supporting the decision with relevant legal precedents. Issue 2: Adjudication of Show-Cause Notice: The Deputy Commissioner of Customs adjudicated the Show-Cause Notice, holding that the design and engineering charges should be included in the assessable value. The Appellant appealed this decision to the Commissioner (Appeals), who rejected the appeal in 2006. The Appellant then approached the Tribunal challenging the inclusion of charges. The Tribunal carefully examined the agreements, purchase order, and the nature of the charges to determine their inclusion in the assessable value. The Tribunal found that the charges were integral to the design and construction of the Palm Oil Mill, supporting the lower authority's decision. The Tribunal emphasized the importance of the design charges for the completion of the project, aligning with legal provisions and precedents. Issue 3: Rejection of Appeal by Commissioner (Appeals): The Commissioner (Appeals) rejected the Appellant's appeal against the inclusion of design and engineering charges in the assessable value. The Appellant contended that the charges were not related to the imported goods but for setting up the entire palm oil mill. However, the Commissioner upheld the lower authority's decision based on the agreements and purchase order terms. The Appellant's arguments regarding the nature of the charges and their connection to the imported machinery were considered but ultimately dismissed. The Tribunal, in its analysis, found no merit in the appeal, upholding the decision to include the design and engineering charges in the assessable value for duty calculation. In conclusion, the Tribunal dismissed the appeal, affirming the inclusion of design and engineering charges in the assessable value of the imported machinery under the Project Import Regulations, 1986. The decision was based on a thorough analysis of the agreements, purchase order terms, and legal precedents, emphasizing the essential role of the charges in the design and construction of the Palm Oil Mill.
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