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TMI Blog2003 (11) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Commissioner (Appeals) accepted the claim and ordered sanction of refund. This appeal by the Commissioner is against that order. 2. The machine in question was imported in November 1998 from Macro Traders Ltd., Dhaka in Bangladesh. The value declared for the set of parts which was comprising the machine in the suppliers invoice value of US $ 25000. In the declaration that accompanied the bill of entry, the importer stated that in terms of joint venture agreement the supplier was entitled to issue and allotment of equity shares in the importer company. The agreement referred to was an agreement between Macro Traders Pvt. Ltd., Bangladeshi company and Balsara Extrusions, an Indian partnership. The agreement recited that subject to G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s amount. 4. Subsequently, the importer filed a claim for refund on the ground that the joint venture agreement between the parties had been terminated on account of disputes between them and therefore the enhancement that was carried out of the value of the machine by Rs. 27.08 lakhs should not be effective. It claimed refund of the duty paid on this sum. The Dy. Commissioner did not accept these contentions. He noted that the service provided by the Bangladeshi company in terms of the joint venture agreement comprise transfer of technical know-how provision of scale and support service and technical supervision of the manufacturing process. The technical know-how accordingly included formulation of the chemical or raw material specifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice dated 9-2-99 issued by the importer Macro Traders. Clause 25.2 of the agreement provided for termination at any time by agreement in writing signed by both parties. In the absence of this consent by the Bangladeshi company to the agreement it continued to be in force. He therefore dismissed the claim. 5. On appeal by the importer the Commissioner (Appeals) allowed the appeal. He accepted the contention of the importer that the amount share of Rs. 108.31 lakhs were not issued for supply in Company and therefore nothing was paid to it over and above the sum of Rs. 25,000/- per machine. The payment of the entire amount was subject to the fulfilment of the certain condition by the supplier and once those conditions were not fulfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no agreement between the foreign supplier and Balsara Extrusions Pvt. Ltd. The joint venture agreement itself did not come into effect therefore the condition in that agreement relating to payment of know-how would not apply. 8. We have noted the know-how that was to be provided by Macro which is specified in schedule 2 to the agreement. It includes formulation/recipe of mosquito coils; specification of raw material its source of supply raw material indigenous substitution; drawings for machines and foundation operating and maintenance manual for the machinery, quality control manual; process charge and other charges, factory layout, material handling methods and training manual. The know-how that was to be supplied by Macro therefore rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he machine would be performed free by the supplier. It is not unreasonable to conclude that the price of the machine as distinguished from the cost to be payable of the know-how is $ 25000. 9. The departmental representative was at pains to emphasise that the cost of the machine roughly was less than the amount payable for the know-how of Rs. 37 lakhs. That the cost of utilising the machine may be higher than its cost does not itself give arise to suspicion. The relative cost of the machine and the know-how may depend on the quality and cost of consideration of one and the know-how and the extent of know-how to be supplied. The know-how to be supplied is as we have seen is considerable and comprised various form, including commissioning t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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