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Issues:
- Inclusion of engineering fees in the transaction value of imported goods. Detailed Analysis: The appeal before the Appellate Tribunal CEGAT, New Delhi involved a dispute regarding the inclusion of engineering fees in the transaction value of imported goods. The case stemmed from an agreement between M/s. Visakhapatnam Steel Project and M/s. Burn Standard Company Ltd. for establishing a Pitch Bonded Dolomite Brick Plant, with M/s. Burn Standard Company subsequently entering into an agreement with M/s. Dolomit Werke GmbH for technical know-how. The contract outlined the scope of work for both parties, with M/s. Dolomit Werke GmbH responsible for technical services related to the manufacturing process. The contract price included payments towards design and engineering, equipment, commissioning spares, and tools to be paid to foreign sub-suppliers. Upon filing a bill of entry for the clearance of equipment, a query was raised regarding the exclusion of fees towards design and engineering services. The Department contended that these charges should be included in the transaction value under the Customs Valuation Rules. However, the Assistant Collector's decision to include the fees was overturned by the Collector, who found no evidence that the design or drawings were provided free of charge to the equipment supplier. The Department then appealed this decision. The Tribunal analyzed the nature of the fees paid to M/s. Dolomit Werke GmbH and concluded that they were not directly related to the production of the imported goods. By examining the scope of work outlined in the contract and the earmarking of payment fees towards design and engineering, the Tribunal determined that the engineering fees were not includible in the assessable value of the imported goods. The Tribunal also referenced a similar case to support its decision. As a result, the appeal of the Department was dismissed, and the order of the Collector was confirmed.
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