1990 (2) TMI 212 - AT - Customs

Summary

Issues Involved:

1. Inclusion of dismantling charges in the assessable value.
2. Provisional assessment under Project Imports (Registration of Contract) Regulations, 1965.
3. Value of spares exceeding 10% of the main equipment value.
4. Exchange rate applicability for the spares.
5. Non-import of certain equipment from the USA.

Detailed Analysis:

1. Inclusion of Dismantling Charges in the Assessable Value:

The appellants argued that dismantling charges amounting to US $5.5 million should not be included in the assessable value as these charges were not part of the import licence issued by the licensing authority. They contended that the Customs authorities had initially agreed to re-credit the amount debited towards dismantling charges back to the import licence. However, the Tribunal held that the inclusion of dismantling, packing, and forwarding charges in the assessable value was justified. The Tribunal referenced the Bombay High Court decision in Union of India v. Glaxo Laboratories (India) Ltd., which established that the assessable value under Section 14 of the Customs Act, 1962 must include all expenses incurred to make the goods ready for delivery at the port of shipment. The Tribunal also cited the case of Bombay Gas Company Ltd. v. Collector of Customs, Bombay, emphasizing that costs incurred by the appellants abroad, such as dismantling and other charges, should be reflected in the assessable value of the goods when delivered in India.

2. Provisional Assessment under Project Imports (Registration of Contract) Regulations, 1965:

The appellants contended that the registration of the contract under the Project Imports Regulations amounted to a pre-assessment of the value. The Tribunal rejected this argument, stating that the registration of the contract facilitated the classification of goods under one tariff heading and did not determine the final assessable value. The Tribunal emphasized that provisional assessments under Section 18 of the Customs Act, 1962, are not controlled by other provisions of the Act due to the non-obstante clause in Section 18. The Tribunal concluded that the scheme of Project Imports assessment primarily relates to the classification of items under one head, with the final valuation to be determined after all imports comprising the project are cleared and a reconciliation statement is submitted.

3. Value of Spares Exceeding 10% of the Main Equipment Value:

The appellants argued that the value of spares imported did not exceed 10% of the value of the main machinery, as some items included as spares were integral parts of the main DMT plant. The Tribunal noted that the Collector had not provided a detailed finding on the appellants' contentions regarding the nature of the items listed in Exhibit 'L'. The Tribunal directed the Collector to re-examine the issue, considering the detailed explanations provided by the appellants and giving a fresh finding on whether the items in Exhibit 'L' were spares or integral parts of the main plant.

4. Exchange Rate Applicability for the Spares:

The appellants contended that the exchange rate applicable to the spares should be the one fixed by the Import Licensing Authority while granting the import licence. The Tribunal disagreed, stating that Section 14 of the Customs Act, 1962, requires the assessable value to be calculated with reference to the exchange rate in force on the date of presentation of the Bill of Entry. The Tribunal upheld the Collector's conclusion that the relevant exchange rate for determining the assessable value, including the value of spares, should be as per Section 14 of the Customs Act.

5. Non-import of Certain Equipment from the USA:

The appellants claimed that some parts of the plant were not imported, and the proportionate value of these items should be excluded from the assessable value. The Tribunal found that this issue required further investigation to determine the factum of non-import. The Tribunal directed the Collector to conduct a detailed investigation into the matter and provide a factual finding on the non-import of certain equipment from the USA.

Conclusion:

The Tribunal upheld the Collector's findings regarding the provisional assessment under the Project Imports Regulations and the inclusion of dismantling charges in the assessable value. The Tribunal directed the Collector to re-examine the issues of non-import of certain equipment and the value of spares exceeding 10% of the main equipment value, providing detailed findings after considering the appellants' contentions. The appeal was disposed of in these terms.