1997 (8) TMI 233 - AT - Central Excise

Summary

Issues:
1. Valuation of purified terephthalic acid (PTA) plant
2. Valuation of paraxylene plant
3. Valuation of steam drive
4. Leviability of duty on fees paid for 'knowhow'

Valuation of purified terephthalic acid (PTA) plant:
The dispute revolves around the Commissioner's valuation of the PTA plant based on its capacity. The applicant challenges the Commissioner's method, arguing that the capacity was erroneously determined at 1.50 lacs MTA instead of the declared 75,000 MTA. The applicant asserts that the transaction value should be accepted, supported by verified invoices. The Commissioner's approach, not proposed in the notice, is criticized for lacking a basis and deviating from established valuation principles.

Valuation of paraxylene plant:
Similar to the PTA plant issue, the valuation of the paraxylene plant is contested. The Commissioner's valuation based on component values from invoices is challenged as exceeding the notice's scope. The applicant argues that the criteria used were undisclosed, denying them the opportunity to address the valuation method during the proceedings.

Valuation of steam drive:
The dispute involves the inclusion of steam turbine and related equipment in the overall cost. The applicant contends that these items were part of performance guarantees and were not separately paid for, thus should not be added to the total cost. The applicant argues that the valuation criteria adopted by the Commissioner do not align with Section 14 of the Valuation Rules, emphasizing the lack of contemporaneous import prices for similar goods.

Leviability of duty on fees paid for 'knowhow':
The disagreement centers on the inclusion of fees paid for 'knowhow' in the plant's value. The Commissioner's decision to add the entire fee instead of the proposed 50% is contested on grounds of natural justice principles and misapplication of legal precedents. The applicant argues that the technical information for producing PTA and paraxylene was post-importation, making the fees non-includable in the assessable value.

The Tribunal, after detailed analysis, denies the waiver of pre-deposit of duty amounting to Rs. 40.14 crores. Instead, the applicant is directed to deposit Rs. 14 crores within two months. The Tribunal emphasizes the need for further hearings to address the valuation discrepancies and determine the proper assessable values based on the presented arguments and legal principles.