2015 (11) TMI 1331 - AT - Customs

Valuation - Demand of differential duty - whether the impugned order is correct in setting aside the OIO or otherwise in so far as relates to valuation of imported goods - Held that - Lower appellate authority in her order nowhere discussed and rebutted as to how the findings of the adjudicating authority was not acceptable instead as per straightaway came to the conclusion that the payment made as per the agreement are to be added to the value of the imported goods as there must be clear cut evidence to show the know how fee is a condition of sale of goods. Whereas we find that the original authority has examined the contract agreement between CIRIA and the appellant. We perused the contract agreement dated 11.02.1994, between CIRIA SpA Italy and MMTCL India - both the conditions have been dealt in detail in the OIO passed by the adjudicating authority. We find that MMTCL is imported the goods under project imports and used the goods in the manufacture of final products which is called Z Blocks, and the same were supplied as per the original contract between to RIL & CIRIA. We also find that as per clause (6) of agreement between CIRIA and MMTCL, appellants have to make payment of 10% as a commission if the final products directly sold. In the present case, it is clearly brought out in the OIO that there is no direct sale of finished goods involved. The LAA without going into the details of contract and without examining the facts straight away ordered for loading of 14.8%. Therefore we hold that loading of value ordered by the LAA is not justified and liable to be set aside - Decided in favour of assessee.

Summary

Issues: Valuation of imported goods under project imports.

Analysis:
The appellant imported metallic cartons and empty bent cartons for the manufacture of 'Z' Blocks under project imports for the Naptha Cracker Project. The adjudicating authority dropped the proceedings and ordered a refund, which was appealed by the Revenue. The Commissioner (Appeals) set aside the original order and allowed the Revenue's appeal. The appellant argued that the Commissioner did not provide detailed findings and enhanced the loading percentage without justification. The Ld. AR supported the Commissioner's decision, emphasizing the involvement of three entities and the correct calculation of the final product cost. The Tribunal analyzed the issue of valuation and found discrepancies in the Commissioner's decision. They examined the contract agreements between the parties, specifically highlighting the clause requiring a 10% commission on direct sales of final products. The Tribunal noted that there were no direct sales involved and concluded that the loading of 14.8% by the Commissioner was unjustified. Therefore, the impugned order was set aside, and the appeal was allowed.