2000 (12) TMI 154 - AT - Customs

Summary

Issues Involved:

1. Classification and dutiability of imported technical service documents.
2. Applicability of Rule 9(1)(e) of the Customs Valuation Rules, 1988.
3. Inclusion of value of technical service documents in the value of imported machinery.

Detailed Analysis:

1. Classification and Dutiability of Imported Technical Service Documents:

The appellants, M/s. Hindalco Industries Ltd., imported technical service documents (designs and drawings) under two consignments, which they classified under Chapter 49 of the Customs Tariff, attracting a nil rate of duty. They argued that these documents should not be classified as turbine generator sets or assessed at the rate applicable to turbines. The Tribunal agreed, citing the decision in the case of M/s. TISCO v. C.C., Calcutta, which held that designs and drawings are classifiable under Chapter 49, not Chapter 84 (machinery). The Tribunal concluded that the designs and drawings should be assessed and levied under Chapter 49 separately from the machinery.

2. Applicability of Rule 9(1)(e) of the Customs Valuation Rules, 1988:

The Revenue's contention was that the value of the technical service documents should be included in the value of the turbine generator sets under Rule 9(1)(e). The appellants argued that Rule 9(1)(e) was inapplicable because the payment for technical service documents was not a precondition for the sale of the turbine generator sets. The Tribunal referred to the Supreme Court decision in the case of Essar Gujarat, which interpreted Rule 9(1)(e) to mean a payment that must be made as a condition of sale. The Tribunal found that the payment for the technical service documents was not a precondition for the sale of the imported components, as the documents were necessary for erection and commissioning activities to be done in India.

3. Inclusion of Value of Technical Service Documents in the Value of Imported Machinery:

The Tribunal examined whether the value of the technical service documents should be included in the value of the imported machinery. The Commissioner (Appeals) had relied on Article 6.1 of the agreement, concluding that the payment for technical service documents was essential for the operation of the turbine generator sets. However, the Tribunal noted that the technical documentation was for post-importation activities, such as erection and commissioning, and thus should not be included in the value of the imported machinery. The Tribunal cited the Supreme Court decision in Tata Iron & Steel Co. Ltd. v. Commissioner of Central Excise, Bhubaneswar, which held that drawings and documents for post-importation activities should not be included in the value of imported goods.

Conclusion:

The Tribunal concluded that the designs and drawings imported by the appellants are classifiable under Chapter 49 and should be assessed separately. The orders of the lower authorities were set aside, and the appeal was allowed with consequential relief. The Tribunal's decision was based on the Supreme Court's rulings, which clarified that payments for post-importation activities should not be included in the value of imported goods, and that designs and drawings should be classified under Chapter 49.