9911796707
TMI Blog1997 (8) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... The first count is the valuation of the plant for manufacture of purified terephthalic acid (PTA). The Commissioner had found that the plant which was claimed to be of the capacity of 75,000 Metric Ton per annum (MTA) was comparable to a plant with the capacity of 1.5 lakh PTA and adopted the value of that plant. He contends that the notice issued to the applicant alleged that the capacity of PTA plant was of the capacity of 1.84 lakh MTA. He says that various hypothetical alternatives were discussed in the notice to determine the capacity of the plant and that thereafter, capacity was alleged to be 1.84 lacs MTA. Based on this capacity, the value was sought to be enhanced by an arithmetical enhancement of the declared value proposed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the plant should be 3.94 lacs MTA. He contends that the Commissioner has not gone on this basis but has arrived at the value by totalling the values of each of the components which comprise paraxylene plant, as indicated in the invoices of the vendors of these components who supplied them to M/s. John Brown Limited who in turn supplied the goods to the applicant at a lower price. The advocate for the applicant contends that the Commissioner has thus gone outside the scope of the notice. Notice did not propose increase in the assessable value of the paraxylene plant on the basis of the vendors invoices. 4. It is further contended that the Commissioner has arrived at the value of the PTA and the value of the paraxylene plant by adoption of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of other items. Consequent upon the inclusion of these goods in the equipment to be supplied, the value of the other goods was reduced so as to include their price in the total cost as negotiated. The applicant had also not made separate payment towards the cost of these goods. There was therefore no basis for separately adding the value on account of the goods in the `third list to the prices of the other goods. 6. It was further contended for the applicant that the values adopted in respect of these three items was contrary to the provisions of Section 14 of the Valuation Rules. There was no basis indicated for not accepting the transaction value. The prices of contemporaneous imports of similar goods were not available, indeed it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dual items were down graded in capacity and their value. V. Narayanan, applicant s Project Manager had intimated to the Department in his letter dated 12 December, 1986 that whereas the normal technology of M/s. Imperial Chemical Industries was for a plant of 2.50 lacs MTA capacity it had been decided to scale the capacity down to 75,000 MTA for the applicant s plant, the smallest ever set up. Narayan had said that the capacity of the plant cannot be estimated on the basis of simple arithmatic calculations. A plant of 75,000 MTA will not necessarily have individual equipment, and machinery after down sizing and the capacity of critical equipment cannot be arithmetically scaled down. These contentions, the advocate for the Department said, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at. Whether it was supplied in pursuance of the performance guarantee of the supplier, was not relevant for this purpose. 11. Advocate for the Commissioner argued that, when the notice was issued, the Supreme Court s decision in Essar Gujarat had not been passed. Hence the notice proposed to include only charges for engineering and design in the assessable value, and, in the absence of details of charges payable on this account, took 50% towards them. Subsequently, after the Supreme Court judgment was received, the decision had been appealed. It is clear from this, it is contended, that the applicant was aware that the total price for the knowhow would be included in the assessable value and the Essar Gujarat decision would be app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of paraxylene plant. Paragraph 10.08.07 of the notice seeks to enhance the value of the paraxylene plant on the basis that the capacity of the plant is 3.94 lacs MTA as against declared capacity of 51,000 arithmetically reduces the value on this, and proceeds to make adjustment of both upwards on account of escalation and downwards on account of lesser increase in the PTA plant. This methodology is summarised clearly in this paragraph. Here again, prima facie, it is difficult to conclude that the Commissioner had adopted the value of the plant by totalling the cost of the components as shown in the invoices of their vendors to M/s. John Brown. While the issues are to be determined after hearing both sides, the fact that, prima facie the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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