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TMI Blog2013 (8) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner had wrongly interpreted the provisions of Rule 4 to reject the transaction value on the ground that importation of cranes in the dis-assembled form means restriction in terms of clause (e) of said Rule 4 (2) of the Customs Valuation Rules – assesse shall be entitled to refund of all payments made including an annual interest payable on the same. The purchase contract also included a warranty and provides that warranty shall survive the expiration and / or sooner determination of the contract - It also provides that the warranty shall be the sole remedy for the goods - the case was decided on the basis of Valuation Rules and the terms of the contract, which invariably were not comparable – according to clause -1 assesse was required to do necessary drawing, design engineering and modification work and thereafter only send the cranes in disassembled form - By the time the disassembled cranes were received in India, full drawing, design and engineering details and documentation required was available – Decided in favor of assesse. - Appeal No. C/955 and 977 of 2006 - Final Order Nos. A/1271-1272/2012-WZB/AHD - Dated:- 28-8-2012 - Mr. M.V. Ravindran and Mr. B.S.V. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt Commissioner, Customs held that the inspection charges Rs. 4,29,986/- were essential to ascertain the condition of the imported goods and must be added to value under the Clause CVR 9(1) (e); that the service charges Rs. 1,39,38,380/- paid by the importer to ICAN Company Limited , Japan being for dismantling, discharging, painting, pre-inspection, etc., of the equipment, were required to be added to value in view of the Supreme Court s judgment in Bombay Dyeing [1997 (90) ELT 276] that the purchase cost for Unicab cables and installation charges therefore (total Rs. 21,13,150/-) being in connection with the importation of the cranes and in fulfilment of the purchase contract, were required to be added to the value; that the purchase cost of items such as gear oil and cost of services such as anchor end buffering, cable trenching, etc. (Total Rs. 61,29,474/-), being required to render the cranes in running condition, were required to be added to the value; that the licence fee Rs. 9,27,715/- was also required to be added to the value under the CVR 9 (1) (c). The ACC also held that these additional charges (total Rs. 2,35,38,706/-) to be added to the value could not be assessed at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery house and on trolley. For the gantry system, inspector will make what inspection is possible without disassembling the system. ICAN shall contact Kawasaki gear box manufacturer for certified inspector. It is the claim of the GPPL that job of the seller is to talk to Kawasaki and identify the certified inspector and once the inspecting agency is identified, rest of the work was done by the inspecting agency and payment was also not made to ICAN and the amount was not specified in the contract, it cannot be considered as condition of sale. However the words that ICAN shall provide, shows that inspection was a condition of the sale and not optional to ICAN. Even though payment has been made separately, the fact remains that it was an obligation of the seller to provide the certificate. Further, in the second contract between ICAN and GPPL signed on the same day, which is a service contract, in clause 3, exclusions from total contract price has been given. A similar clause is available in the purchase contract also in clause 3. Among the exclusions from the total contract price, the inspection charges has not been included. This would show that it was obligatory for conduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment for any work is done outside India, than such charges have to be included. In this case, the installation and Commissioning is done after importation in India. He submitted that Rule 4 and interpretation rules clearly hold that charges for commissioning, installation and erection are excluded from the installation as they are post importation activities. He relied upon the decision in the case of Commissioner of Customs (Port) Chennai vs. Toyota Kirloskar Motor Pvt. Limited - 2007 (213) STR 4 (SC), Commissioner of Customs (Posrt Kolkata vs. J.K. Corporation Limited 2007 (208) ELT 484 (SC), Expert Industries Pvt. Limited - 2010 (261) ELT 607 (Tri. Bang.). 11. On the other hand learned A.R. submitted that it is very clear from clause 12 of the purchase agreement which provides that delivery will taken in accordance with the contract when GPPL delivers to ICAN with completion certificates for all the three cranes. He submits that this clause has not been referred to in isolation at all. This has to be read with clause relating to warranty given by ICAN and also clause 6.5 of the service contract which speaks of delivery of completion certificates from GPPL to ICAN, which acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfy the obligation of the seller to the extent that such payments are not included in the price actually paid or payable. 15. Therefore, we have to see whether in terms of agreement before us, it can be said that the cost of erection, installation and commissioning paid to GPPL to ICAN is a condition of sale or not. 16. On 27.11.2003, the purchase contract was entered and on 30.11.2003 the service contract was entered. For purchase agreement there were three parties, ICAN, GPPL and AP Moller, whereas for service contract there were two parties, ICAN and GPPL. In the purchase contract, the scope of work includes modification of the cranes by proper design and engineering work, providing documents and drawings, carrying out general modification, painting of rusted areas prior to loading of cranes in Japan, getting the cranes inspected by a certified inspector, specifications relating to mechanical and electrical items, arrangement for transfer and supply of spare parts. The total contract price is specified in clause 2 of the agreement and according to which, the contract price is for the goods delivered, title transferred at Japanese Port, sea fastened at the heavy lift vess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificates by GPPL to ICAN. But as we have observed clause 11 completes whole purchase contract excepting for dispute resolution, force majeure, separability, notes etc. which are standard clauses in any purchase agreement. Similarly in the case of service contract also, with clause-6 of the service contract virtually ends and after this clause the usual standard clauses in contracts such as dispute resolution, effective dates, termination, limitations etc have been given. After analysing both the contracts in detail and considering the submissions made by learned counsel for the appellants, the only conclusion that can be reached is that purchase contract contemplates two deliveries. First one is delivery of disassembled cranes on board the vessel with which title and the risk pass. The second one is the delivery of cranes after assembly and its acceptance by both the parties. We take note of the fact that the purchase contract also includes a warranty and provides that warranty shall survive the expiration and / or sooner determination of the contract. It also provides that the warranty shall be the sole remedy for the goods against ICAN for GPPL. Further, we also take note of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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