2018 (3) TMI 1259 - AT - Customs

Valuation - includibility - value of the designs and engineering - Rule 9(1)(b)(iv) of the Customs Valuation Rules 1988 - whether the design and engineering charges paid by the appellant to the foreign supplier of machine are on account of erection installation and commissioning and whether the same is includible in the assessable value of the imported goods? - Held that - as regards the issue whether the value of design and engineering is on account of erection installation and commissioning despite the appellant made detailed submission in the reply and in their additional submission before the adjudicating authority the adjudicating authority has not considered properly. Therefore the matter needs to be considered. As regards the issue that the SCN invoked Rule 9(1)(e) whereas the impugned order confirmed inclusion of value of design and engineering invoking Rule 9(1)(b)(iv) this issue also needs to be considered. Appeal allowed by way of remand.

Summary

Issues:
- Inclusion of design and engineering charges in the assessable value of imported goods
- Correct rule invoked for inclusion of charges
- Legal validity of the demand and order

Analysis:
The case involved a dispute regarding the inclusion of design and engineering charges in the assessable value of imported goods under the Customs Valuation Rules. The appellant argued that the charges were for erection, installation, and commissioning, not related to the imported machine. The adjudicating authority had invoked Rule 9(1)(b)(iv) to enhance the value, leading to confiscation and penalties under the Customs Act. The appellant contended that the show cause notice had invoked a different rule, making the order beyond its scope. The appellant cited relevant judgments to support their argument.

The Revenue, represented by the Joint Commissioner, maintained that the charges were rightfully included in the assessable value as per the contract, which included design and engineering charges for installation and commissioning. The Revenue argued that quoting different statutory provisions did not render the order illegal and cited various judgments to support their stance.

After considering the submissions, the Tribunal found that the key issue was whether the design and engineering charges were for erection, installation, and commissioning, and if they should be included in the assessable value of the imported goods. The Tribunal noted that despite detailed submissions by the appellant, the adjudicating authority had not properly considered this aspect. Additionally, the discrepancy between the rule invoked in the show cause notice and the impugned order needed further examination. Consequently, the Tribunal set aside the impugned order and remanded the matter back to the adjudicating authority for a fresh decision addressing both issues raised by the appellant. As the remand was based on the preliminary issue raised, the Tribunal did not delve into the cited judgments.

Ultimately, the appeal was allowed by way of remand to the adjudicating authority, emphasizing the need for a thorough reconsideration of the issues at hand. The judgment was pronounced in court on 27.2.2018 by the Tribunal.