9911796707
TMI Blog2006 (7) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... onths from the date of communication of this order. The bank guarantee furnished by the appellant shall be kept alive and the amount deposited shall also continue to remain in deposit till the date of decision by the Tribunal whereafter the bank guarantee and the deposit shall be dealt with consistently with the order of the Tribunal. 20. Though we have set aside the order of the Tribunal and made a remand we would like to clarify a few points. Apart from the appellant, two officers of the company namely Dr. J.J. Irani and Shri S.L. Shrivastava and an engineering consultant of the appellant, namely M/s. M.M. Dastur Co. were also proceeded against and penalties were imposed on them. They were exonerated by the Triounal. The Revenue has not come up in appeal against the order of the Tribunal exonerating the above said three. This order of remand would not reopen the proceedings against those three. Similarly, the Tribunal has held that the duty liability of the appellant in spite of a finding of under-valuation could not be re-determined by pegging the value of the equipment at an amount over and above 21.2747826086 million DM as this was the figure found by the adjudicating offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawings imported under contract MD 301, consistently with the observations made and findings recorded in its judgment by the Supreme Court (para 19). 3. In the said order, impugned herein, the Commissioner has, besides quoting with approval the findings contained in the earlier order dated 3rd April, 1996 on the issue, has given his further reasonings, in support of the purported conclusion arrived at, in paragraphs 21 to 23 (at pages 71-72) of the order. 4. Elaborating further of the aforesaid findings of the Commissioner, it has been contended on behalf of the respondent before this Hon ble Tribunal that the transfer of part of the equipment cost to the technical documents cost has taken place in the instant case because of non-inclusion of the price of the following in the price of the equipments imported under MD 302 :- (i) Price of drawings and technical documents for site erection work to be done in India. (ii) Price of drawings and technical documents for subsequent maintenance of the blast furnace of torpedo ladle cars. 5. Referring to the Agreement MD 301 for supply of technical documents (at page 46 Appellant s Paper Book Volume I), i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifications and general drawings for erection tests and start up, (iii) manpower estimation and (iv) means for erection definition . Similarly, in respect of technical documents for T.L.C s (in section II of Annex. I), there are different drawings for manufacture and instructions for assembly and instructions for commissioning as already extracted above. If one takes a look at page 788 of the paper book (Vol.-V), it will be observed that 3 Nos. Torpedo Ladle Cars having weight of 540 tons in S.N. Project is being supplied under the contract and no part thereof is to be manufactured or purchased in India, yet detailed drawings as indicated by use of symbol D in the table at page 788 (supra) and listed in Section II to the broad categories of drawings at page 747 (Vol. V-paper book) have been supplied. This belies the statement of the appellants that drawings for manufacture of only those parts not supplied by S.N. have been supplied. Similar examples can be found regularly in the long tabular list of items supplied or partly supplied for blast furnace in the said table. It is pertinent to mention, on first appellant s own admission that where an item has been partly supplied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mported or manufactured by the appellant, the value of the latter category of documents also being neither dutiable nor clubbable with the value of imported goods . 10. It is submitted that, in view of the aforesaid finding of the Supreme Court, none of the above two items mentioned in paragraph 4 hereinabove, can be included in the price of the equipments imported under MD 302, and consequently in determining assessable value thereof for the purpose of levy of customs duty. Therefore, on this ground it cannot be contended or held that there has been under-valuation of the equipment price by the appellant by transferring a part of the price thereof to the price of technical documents imported under MD 301. 11. In this respect it is also relevant to refer to the Annexure-I of MD 302 (Equipment Contract), which contains, inter alia the items sold under the contract. Sl. No. 7.1 thereof (at page 161 of Volume I of the Appellant s Paper Book) reads as follows - All essential standard accessories, initial spares, reference and instruction manuals etc. included . From this, it would be clear that, inter alia, cost of all instruction and operating manual, etc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order dated 20th February, 2001 but also the detailed submissions made by the appellant (in short TISCO ) contained in inter alia the Written Notes of Argument filed before the Commissioner (at pages 1A to 20 of the Appellant s Paper Book-Volume I). This by itself has rendered the said order untenable and unsustainable. In this respect reliance is placed upon, inter alia the following decisions :- (i) Jai Bhawani Steel Enterprises Ltd. v. Commissioner of Central Excise, 2003 (157) E.L.T. 427 (T). (ii) Youngman Hosiery Factory v. Commissioner of Central Excise, 1999 (112) E.L.T. 114 (T). (iii) Banco Aluminium Ltd. v. Commissioner of Central Excise, 2005 (181) E.L.T. 110 (T). (iv) Krishna Industrial Corporation Ltd. v. Commissioner of Central Excise, 2005 (186) E.L.T. 318 (T). 20. Without prejudice to the aforesaid, it is submitted that from what is stated hereinbelow it would be evident that there has been no under-valuation of the equipment price in the instant case and that the onus cast upon the respondent in this respect by the Supreme Court (in paragraph 18 at p 250) has not and cannot be said to have been satisfied. 21. The contracts in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apparent from the contract itself. For example, under item Nos. 2.3.12.1 and 2.4.10.4 of the contract (at pages 55 and 61 of Appellant s Paper Book-Volume I), it would be seen that approximately 2000 Metric Tonnes of refractories which SN had received from its suppliers under the contracts it had entered into with them would be kept by SN and was not supplied to TISCO. Similarly, it would be seen from the initial offer letter dated 4th April, 1986 of EH that under its respective contracts SN had not received delivery of substantial tonnage of 2.518 tonnes of materials (at pages 288 and 289 of Appellant s Paper Book-Volume I). As such it was impossible for SN to supply such non-received material to TISCO under the subject contracts. Significantly, the said order is completely silent on these important and relevant materials, although the attention of the Commissioner was specifically drawn thereto. 24. From the said letter dated 4th April, 1986 (at p. 295 of Appellant s Paper Book-Volume I), it would also be seen that although SN had received under its contracts from its supplier eleven torpedo ladle cars, it would be selling (and sold) to the Company only three torpedo ladle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 108 of the said Act. Question Nos. 21 and 22 of his statement dated 13-10-1991 (Pages 222 to 244 of Appellant s Paper Book-Volume I, at p227) and answer thereto are as follows :- Q. No. 21 : Specifically talking about the B.F. and 3 TLC which details did you carry with you to TISCO? A The details carried by us to TISCO with offer was as follows:- (a) the brief technical description of the B.F. and designing data. (b) Brief description of the Engineering details available in possession of SN which would be sold along with equipment. (c) Equipment schedule running up to about 40 pages giving break up equipment available with SN as against projected requirement of the project. Q No. 22: What kind of documents were stated? A. The engineering documents which were stated to be available along with the B.F. included basic design parameters, detailed design and engineering for the whole plant i.e., over and above the equipment which was in possession with SN to enable any buyer co complete the plant by processing the rest of the items . In spite of his attention being drawn to the aforesaid material evidence, the said order of the Commissioner is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing equipment as well as for discussion with SN Portugal Engineer to make assessment of balance equipment that would be required to be procured in India. I also wanted to collect some basic drawings with which we can start primary work for setting up the plant at Jamshedpur. For this purpose I collected some plant layout drawings and brought them with me. Q.No. 9: Mr. Chadha went there earlier just to see the equipment or to make an inspection formal/informal? Ans. Mr. Chadha went there to check generally the condition of the equipment, see whether they are in good condition. Whereas my going to Lisbon was for assessing the available equipment and the balance equipment to be procured in India and collect preliminary information and layout drawings. Q.No. l0. Was TISCO already satisfied the equipment offered made a complete blast furnace before you went and what were Shri V. Chadha s role in it? Ans. TISCO had already satisfied about the extent of equipment M/s. S.N. Portugal had and the balance equipment that had to be procured and Mr. Chadha was not involved in this. Q. No. 58: How did M/s. TISCO become satisfied that the equipment offered by M/s. S.N. Portugal and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswers to Questions 39, 40 and 41 of Shri Parthasarathi as contained in his statement dated 12th October, 1992, (Annexure 5 of SCN at page 182 of Appellant s Paper Book-Volume I), on a plain reading thereof set out hereunder, would show that the support thereon by the Commissioner, is misplaced and do not support the purported conclusion arrived at by the Commissioner: Q.No. 39: Is it customary to have separate prices for engineering and equipment in purchase and sale of steel plant equipment, if so what is the scope of the expression Engineering ? Ans. In a number of case foreign suppliers quote separately for engineering and buy the equipments from the equipment suppliers and supply the two together. For this reason they indicate the cost of the equipment separately and the cost of the engineering separately. Q. No. 40. Thus the supply of B.F. and T.L.C. by M/s. S.N. fall in similar category. Ans. Yes, B.F. quotations are also generally received separately for Engineering and equipment. Q.No. 41. In such situations what actually is meant by Engineering . Please elaborate it. Ans. The engineering would cover the selection of major equipments, designs, selecting au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir in the existing furnace during relining. Similarly the basic documentation could be used with the changes to certain areas where such technological developments have taken place. Therefore, the reduction in value of engineering for technical obsolence will be at a very low rate. 33. The ratio as contained in the telex in question (relied upon by the Commissioner in the said order) are wholly immaterial and have no manner of application whatsoever to the instant case. Significantly there is no other evidence on record except the said telex message (which is also vague and devoid of any material particulars) as regards the alleged ratio between the price of equipments and materials on the one hand technical documents on the other hand under the subject contracts. In this respect it is also pertinent to note that at no point of time SN had made available to TISCO the contracts which it had entered into with its suppliers. They or their agents have not made available such contracts also to the Customs authorities inspite of attending to summons under Section 108 of the said Act and giving statements. In this connection the following observations of the Commissioner s predecesso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary to the records. For example, at page 41 of the order dated 3-4-1996 referring to the document, being Minutes of the Meeting dated 19/20 Sept., 1989 [Annexure 18 (c) of SCN, at pp. 245 to 250 of Appellant s Paper Book - Volume I] amongst representatives of the appellant, ITP and M.N. Dastur Co. Ltd., it was alleged that in Note at A-I thereof it is observed as follows:- I find, further, support in holding my inference, from the Note at A-I in the Minutes of the Meeting held on 19/20 Sept., 1989 amongst representatives of Messrs TISCO, ITP and M.N. Dastur Co. Ltd., wherein it has been confirmed that the items of equipments mentioned under column SN Project gives the complete list of equipments for the Blast Furnace Project and that all equipments as stated under this column were complete and available . If the above is compared with what is actually contained in the said Minutes the incorrect quoting of what is contained in the said Note at A-I (at page 245 of Appellant s Paper Book - Volume I) would become evident. The said Note in the said Minutes reads as follows :- A. ENGINEERING AND CONSULTING SERVICES: 1. It is confirmed that items of equipment mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M) approximately between equipments and enginnerings and drawings in the instant case cannot be said to be arbitrary of unreasonable or incorrect or done with any ulterior or mala fide motive or purpose. 38. In this connection reference may also be made to TISCO s letter dated 21st July, 1988 to the Govt. of India (Annexure 5 to the reply to the show cause notice, at pages 268-270 of Appellant s Paper Book - Volume I). Dealing with the similar query raised by the Govt. of India it was stated as follows :- (6) As described in para 5, engineering is readily available for the Integration of different equipment. The specifications are also available for the equipments which are to be procured in India. The equipments which are not available with SN are mainly fabricated structures and their specification and drawings are also available. Hence, there will be no difficulty in fabricating/procuring and machining the imported and indigenous equipment at TISCO. (7) The engineering fee of DM 12.5 million is reasonable. It may be noted that the engineering fees quoted by reputed parties such as Davy Mckee, U.K. Demag, West Germany for a 2400 M CD. Blast Furnace in 1986 were DM 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven assuming though denying that such suggestion was made by Mr. S.L. Srivastava of TISCO was that the break-up should be worked out on the portion of original supply prices Pro rata (at page 442 of Paper Book). This was because as would be evident from the letter dated 11th July, 1988 of the Govt. of India, the Govt. of India had wanted a proforma invoice of the capital goods to be imported with itemwise break-up. Annexure 14(o) is a telex message from EH to EHI. TISCO had nothing to do with it. 43. From the agreement for sale of equipments and materials MD 302 (at p. 98-99 of Appellant s Paper Book - Volume I) it would be seen that what has been supplied to TISCO under the subject contract is equipments and materials on as is where is basis (clause 4 of the agreement). This clause also contained the following condition :- As a consequence, the SELLER takes no responsibility for any defects or deficiencies whatever they are, namely as regards design project, drawings, operation instructions and hand-books nor for any manufacturing and execution defects or deficiencies of the equipments and materials. Likewise, he neither renders nor assumes any guarantee or obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als negotiated and finalised by TISCO with SN on a principal to principal basis was genuine, bona fide and reflected the correct transaction value of the said equipments and materials for the purpose of determining assessable value thereof and, similarly, the price of MDM 12.5 for the engineering and drawings was also a negotiated bona fide, genuine and correct price for the engineerings and drawings and that the contrary purported finding contained in the said order is ex facie untenable and unsustainable, it is submitted that there has been no misdeclaration by the appellant of the value of the goods imported and no material evidence to the contrary has been disclosed. The onus cast upon the respondents by the Supreme Court in this regard has not been and/or cannot be said to have been satisfied. 49. In the said order an issue has been sought to be made out with reference to splitting of the composite contract of 26 MDM into two contracts, MD-301, and MD-302 and purported inference have been sought to be arrived at. It is submitted that in the light of the finding of this Hon ble Tribunal in its order dated 20th August, 1997 and the Supreme Court observation thereon in its j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bad. 51. The said goods not being liable to confiscation under Section 11 l(m) of the said Act, the consequent direction as contained in the said order allowing redemption thereof upon payment of a fine of Rs. 6.5 crores is also wholly without jurisdiction, without authority of law and thus illegal, invalid and bad. 52. Without prejudice to the aforesaid and fully relying on the same further and in any event it is submitted that, even otherwise the Commissioner has erred in confiscating the said goods and imposing redemption fine for redeeming the same. 52.1 In the judgment dated February 16, 2000, the Hon ble Supreme Court has observed, in paragraph 20 (at page 251) thereof, that if the Tribunal found the equipments forming the subject matter of MD 302 to be under-valued, the legal consequences flowing from such findings may follow rejecting the contention of the appellant that since the Tribunal had held the goods were not liable to confiscation, that part of the order should be held to have achieved a finality. It is submitted that to this extent, the Supreme Court upheld the Adjudication Order dated April 3, 1996 of the Commissioner, wherein the Commissioner had he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also contrary to the provision of Section 125(1) of the said Act and thus, illegal, invalid and bad. No basis has been disclosed in the said order as to how and on what basis the Commissioner has purported to arrive at the redemption fine of Rs. 6.5 crores. On this ground also the redemption fine is liable to be set aside. 54. In the facts and circumstances of the instant case none of the conditions precedent for imposition of any penalty under Section 112 of the said Act has been or can be said to have been satisfied. The purported imposition of penalty by the Commissioner upon the appellant is therefore totally illegal, invalid and bad. 55. Without prejudice to the aforesaid and fully relying on the same further and in any event, the imposition of penalty of Rs. 4 crores and redemption fine of Rs. 6.5 crores, in the facts and circumstances of the instant case, are undue, oppressive, unjust and harsh and on this ground also, are liable to be set aside. 56. It is therefore prayed that the appeal be allowed and the impugned order of the Commissioner be set aside, including the purported demand made and penalty and fine imposed therein, with consequential relief to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and the 3 TLCs as per the offer letter dtd. 13-8-86 was DM 29.9 millions. After a good bargaining and negotiation with SN, the value of the blast furnace equipment and the 3 TLCs was finally fixed at DM 26 millions. (iv) A Memorandum of Understanding was signed towards this end by SN and the appellant on 29-2-88 followed by a Protocol which was signed by the parties on 14-4-88. As per the protocol, the total price was to be the price for the equipment plus price for the engineering, F.O.B. Portugal. Clause 1 of the protocol stated that the price for the equipment with suitable sea-worthy packing to be provided by SN would be DM 13.5 millions and the price for engineering would be DM 12.5 millions, while Clause 2 stated that the equipment was sold without any operation or performance guarantees, in as is, where is condition. (v) Subsequently on 11-10-89, a Sale Contract (page 21 of PB, Vol. I) was entered into between the parties. Preamble to this contract, inter alia, stated that the seller offered these equipments and the materials for sale to the buyer. The Technical Documentation for construction, erection, operation and maintenance as, received from the origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts covered by MD 302. By an order dtd. 10-8-90, the Asstt. Collector permitted clearance of the goods upon furnishing of a Bank Guarantee of Rs. 7,44,80,301/- and on deposit of extra duty of Rs. 2,82,01,636/- as also payment of admitted Customs duty. Thereupon the appellant moved the Orissa High Court by filing a Writ Petition on 10-8-90. On 30-8-90, the Orissa High Court disposed of the Writ Petition by directing release of the goods on the appellant s furnishing a Bank Guarantee of Rs. 8 Crores and depositing Rs. One Crore accompanied by payment of admitted Customs duty. Accordingly, the appellant got the goods cleared. (ix) Thereafter the appellant replied to the Show cause notice and the Asstt. Collector had also granted personal hearing. However, before passing any order, consequent upon the detailed investigation, on 23-8-93, the Commissioner of Customs and Central Excise, Bhubaneswar issued a second Show cause notice to the appellant and others in continuation to the notice dtd. 16-7-90. The said notice finally resulted into the order dtd. 3-4-96 passed by the Commissioner confirming the duty of Rs. 15,49,09,060/- and imposing a penalty of Rs. 5 crores on the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions into consideration. Accordingly we are of the view that the matter needs to go back to the Commissioner for appreciating the detailed submissions made by the appellants before us. Accordingly for the purpose of deciding the allegations of transfer of value of equipments towards the price of engineering design documents, we remand the matter to the Commissioner for fresh decision. Appeal is thus allowed by way of remand. (xiii) Pursuant to the above directions, the Commissioner has passed the impugned order dtd. 14-2-2002 which has been appealed by the appellant. In the impugned order, the Commissioner has determined the value of the Blast Furnace Equipments at DM 21.28 millions and that of engineering documents and drawings at DM 4.72 millions. The Commissioner has also ordered confiscation of the said goods u/s. 111(m) of the Customs Act, 1962, but allowed to be redeemed on payment of a fine of Rs. 6.5 Crores u/s. 125 of the said Act. The Commissioner has also imposed a penalty of Rs. 4 Crores on the appellant u/s. 112(a) and (b) of the said Act. 3.4 At that outset, it may be noted that EHI, vide its letter dtd. 13-8-86 to the appellant, offered for sale vari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the technical documents and the equipments in the ratio of 19:81. No fault can, therefore, be found with the impugned order. 3.8 One of the contentions raised in the appeal as also at the time of hearing is that SN had received 11 Torpedo Ladle Cars from ITP, while it sold to the appellant only 3 Torpedo Ladle Cars, a reduction of approximately 75 per cent. This obviously reduced substantially the ratio between the equipments and the engineering. There was, however, no reduction in the engineering and drawings supplied. They remained the same. Further, most of the refractories received by SN from its supplier were not sold to TISCO. As against the total contracted weight of 23676 M/T for supplies from ITP to SN, only 14045 M/T had been supplied to TISCO which represented only 56% of the equipments covered by the SN-ITP contract. Thus based on the SN-ITP contract, the ratio of the price of equipments to technical documents was 46:54 which was very close to the ratio of the prices at which these were imported which was 52:48. 3.9 The above contention of the appellant does not merit acceptance. The appellant ignores the fact that the goods were sold on the basis of as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to the Technical documents carrying nil rate of duty. 3.12 Although in the Protocol dtd. 14-4-88, separate prices for the equipment and the engineering were shown, it appears, SN was not inclined to have two separate agreements one for the equipment and the other for the engineering. Hence the appellant went on persuading SN until the object was achieved. This will be quite evident from the following documents. (i) Minutes of the meeting held at Lisbon on 25-7-38 between Dr. J.J. Irani of TISCO and the representative of SN (at page 332/334 of the PB Part-II filed by the Deptt.) (ii) Telex dtd. 19-12-88 from TISCO to SN (at page 336/338 of the PB Part-II filed by the Deptt.) (iii) TISCO s telex dtd. 29-12-88 to SN (at page 341/342 of the PB Part-II filed by the Deptt.) 3.13 Perusal of these documents would show that TISCO was persistently trying to impress upon SN to agree to make two separate agreements - one for the engineering and the other for the equipment supply. The fact that SN was not inclined to have two separate contracts is quite clear from SN s Telex dtd. 23-12-88 to TISCO (at page 339/340 of the Deptt. s PB, Part-II). Para 1 of this Telex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner has determined the value of the technical documents and the value of the equipments separately in accordance with break-up of prices given in the Telex dtd. 8-2-88 by EH to EHI. 3.16 At the cost of repetition, it may once again be mentioned that EH was the Agent of SN for sale of the blast furnace equipment and 3 TLCs along with the related technical documents. They were the link between the appellant and SN. Be that as it may, based on the break-up of prices given in the aforesaid telex, the Commissioner has correctly determined the value of the technical documents at DM 4.72 millions and that of equipments at DM 21.28 millions. The appellant has not disputed the genuineness of the telex at any stage of the proceedings. No fault can, therefore, be found with the impugned order. 3.17 While referring to Annexure-I to MD-301 (Agreement for supply of Technical Documentation), the ld. Counsel for the appellant stated that the blast furnace equipment was not complete and many of the parts were required to be procured/manufactured in India and for which drawings and technical documents were also supplied by SN. 3.18 In this connection, EHI s offer letter dtd. 13-8-86 may o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mudgun, tap hale, drilling machine etc. in addition to stock house equipment such as screens, feeders, weigh hoopers, conveyor belting and the gas cleaning equipments etc. Also it. would include the necessary measurement instruments for measurement of temperature and flow and other control computers along with the information to make them usable such as listed under the heading drawing/documents for electrically at B.F. in the Annexure-I to the above referred letter No. AO/CME/7857, dated 8-6-89 and the computer and Micro computer with complete operating software . The B.F. offered by M/s. S.N. Portugal comprised of these equipments and technical, literature and, therefore, is substantially complete. In his statement dtd. 13-10-91 (at page 222 of PB, Vol. I), in answer to question No. 27, Shri Sudheer has also stated that the equipment supplied by SN to TISCO was complete in all respects. From the above evidences, there cannot be any manner of doubt that the blast furnace was substantially complete. 3.21 During the hearing, a grievance was made by the ld. Counsel that the appellant had submitted written notes of arguments under cover of its letter dtd. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be included in the value of the equipments, as the same were purchased compulsorily along with parts of the equipments in view of provision under Rule 9(l)(b)(iv) as well as Rule 9(l)(e). However, we find that the Hon ble Supreme Court, on appeal from the said order has ruled that the cost of the technical documents can not be added to the value of the equipments. As such, in the second round of litigation, it is not open before us to consider, whether value of the technical documents can be added to the value of the equipments by interpretation of the provisions under the Customs Valuation Rules, 1988. The matter has been remanded by the Hon ble Supreme Court to specifically consider the plea of the department as to whether the value of the equipments has been bifurcated by transferring a part of the value to the value of engineering documents and drawings. The question, therefore, in the fresh proceedings before us is limited to determination as to whether the declared value of the impugned equipments is correct or part of its value is shown as value of the engineering documents and drawings. The Hon ble Supreme Court has also held that the plea of the Revenue regarding under-v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department s case that once the contract was divided into two sub-contracts (MD-301 and MD-302), the appellants promoted MD-301 as a Foreign Collaboration Agreement and the contract amount was shown as a Foreign Collaboration Fee. However, a five years collaboration agreement was doubtful as the equipments being sold was on as is where is basis. MD-302 was presented as an agreement for purchase of new/unused equipment from the original supplier from Italy. It is the department s case that the appellants had kept the customs authority in dark about MD-301 sub-contract and had not submitted copy of the sub-contract MD-301 to the customs authorities in Paradeep and the technical documents under MD-301 was cleared from the Air Cargo Complex at Kolkata at Nil rate of duty. 7. In view of the foregoing as well as other attendant circumstances, the department has concluded that the appellants have purchased substantially the same equipments with necessary documentation which was initially sold by the Italian manufacturer to SN and subsequently resold to the appellants and that the total amount has been divided under two sub-contracts showing a lower value for the equipments which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical documentation of the equipments, in the possession of the Seller belongs to the phase in which the plan of Seller was suspended and may possibly not correspond to the final versions which were to be worked out only during or after erection, tests and start-up. This clause of the contract is very significant and it clearly indicates that SN has transferred the same technical documentation under sub-contract MD-301, which it had earlier received from the Italian manufacturers. We also note that in the Telex dated 8-12-88, on the basis of break-up received from SN, EHI has clearly indicated that 19% of the value represented cost of engineering for the Blast Furnace and 6% of the value represented cost of the Torpedo Ladle Cars. 12. In our view these percentages can be applied to the initial offer value of 28 Million DM for the Blast Furnace and 1.9 Million DM for the 3 Torpedo Ladle Cars as per the offer made by SN to the appellants for working out the value of engineering. Applying the percentages indicated in the Telex to the initial offer from SN, the engineering cost for the Blast Furnace comes to 5.32 Million DM (28 MDM 19%) and the cost for the engineering for Torpedo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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