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TMI Blog2016 (9) TMI 726X X X X Extracts X X X X X X X X Extracts X X X X ..... ’ is a post-importation cost. No evidence has been adduced to show that the provision of these ‘drawings’ is conditional to placing order for equipment or that it is a pre-importation cost - mere supply of drawings at a value in the same agreement does not, ipso facto, have the support of law resort to rule 9 - cost of drawings and engineering services not included in the assessable value. Appeal of revenue dismissed - decided against Revenue. - C/875/2004 - A/89229/16/CB - Dated:- 17-8-2016 - Shri M V Ravindran, Member (Judicial) and Shri C J Mathew, Member (Technical) Shri S.J. Sahu, Asstt. Commissioner (AR) for the appellant Shri R Krishnan, Advocate for the respondent ORDER Revenue is aggrieved by the impugned order no.269/2004- MCH dated 18th June 2004 of Commissioner of Customs (Appeals), Mumbai who has set aside the addition of US$ 175000 to the assessable value made while finalising the provisional assessment relating to project imports effected by M/s Kinetic Technology India Ltd (now known as Technip KT India Ltd) for M/s Gujarat Godrej Innovative Chemicals during 1991. The first appellate authority held the enhancement of assessable value by i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment valued at US$ 132000 (= Rs. 34,41,982 @US$ 3.8350 for Rs.100) and Rs.39,00,000 respectively. 4. Revenue seeks restoration of the finding of the adjudicating authority. The original authority, on noticing that only one portion of the price payable, viz. for the equipment imported as parts, was declared in the bill of entry, relied upon the mandate for adjusting the value declared under Rule 4 in accordance with Rule 9 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 to arrive at the price to be finally assessed to duty. First appellate authority, per contra, accepted the contention of the importer that there is no nexus between imported goods and the engineering drawings which relate to goods that are to be fabricated by them locally before incorporating in the plant for M/s Godrej Innovative Chemicals Ltd. It was held that the show cause notice was bereft of evidence that supply of goods were contingent upon payment for engineering drawings and further held that as the engineering drawings are intended for post-importation activity, the cost thereof is not, in accordance with decisions of the Hon ble Supreme Court, includible in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble Supreme Court in Commissioner of Customs Ahmedabad v. Essar Steel Ltd [2015 (319) ELT 202 (SC)], Commissioner of Customs (Import) Mumbai v. Hindalco Industries Ltd [2015 (320) ELT 42 (SC)] and Tata Iron Steel Co Ltd were cited to drive home the finality accorded to the issue in dispute. 8. The facts are simple enough: the project authority contracted with respondent to commission its PSA Hydrogen Plant for which the contractor placed order dated 15th November 1990 with M/s UOP Inter Americana Inc. for molecular sleeves, automatic control valves, current to pressure transducers and filter regulators. Another order dated 18th January 1991 requisitioned pressure safety relief valves, receiver gauges, pressure transmitters, pressure switches and temperature indicators. A third order was placed on 24th January 1991 for control panels of specified description. We also note that there is a separate approval for procurement of engineering drawings and designs. 9. A three-way agreement bound the overseas supplier to consign the listed parts to the respondent-importer who, in accordance with the contract entered into with M/s Gujarat Godrej Innovative Chemicals Ltd, commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices which are post-import. Therefore, this case is also squarely covered by the judgment of this Court in Commissioner of Customs, Ahmedabad v. M/s Essar Steel Ltd [Civil Appeal No. 3042 of 2004] decided on 13th April, 2015 [20115 (319) ELT 202 (SC)]. 12. Accordingly, we have perused the decision of the Hon ble Supreme Court in Commissioner of Customs, Ahmedabad v. M/s Essar Steel Ltd [20115 (319) ELT 202 (SC)], in which it was held thus: 7 A cursory reading of the Section makes it clear that Customs duty is chargeable on goods by reference to their value at which such goods or like goods are ordinarily sold or offered for sale at the time and place of importation in the course of international trade. This would mean that any amount that is referable to the import goods post-importation has necessarily to be excluded. It is with this basic principle in mind that the rule made under sub-clause 1(A) have been framed and have to be interpreted. and distinguishing the facts in Collector of Customs (Preventive) v. Essar Gujarat Ltd [1996 (88) ELT 609 (SC)] wherein the agreement covered a licence for operation of the plant which rendered it a pre-import transaction, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the agreement, the sale of the plant had not taken place even at the time when the contract with Midrex was being signed on 4-12-1987, although the agreement with TIL for purchase of the plant was executed on 24th March, 1987. Therefore, we are of the view that the Tribunal was in error in holding that the payments to be made to Midrex by way of licence fees could not be added to the price actually paid to TIL for purchase of the plant. 17. The Court noticed several curious aspects of the Agreement stating that it started with the recital that the Purchaser and the Seller have today respectively purchased and sold a Direct Reduction Iron Plant, on the following terms and conditions , which, according to this Court , indicated that the purchase and sale of the plant had taken place on 24th March, 1987, but in clause (2) it was stated that the purchaser would purchase the property from the seller at the stated price. Upon construing the terms of the conditions, it was opined: 24.Therefore, the process licence fees of DM 2,000,000 was rightly added to the purchase price by the Collector of Customs. The order of CEGAT on this question is set aside. 19. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, is a separate identifiable amount charged for the same. 13. It is, therefore, unambiguously clear that rule 9 of the Rules supra does not confer a blanket mandate to add the value of elements of a contract merely because the supply of imported goods are covered in the same contract. The nature of each element of the contract that has a separate and distinct value, whether so segregated at the specific request of the importer or not, must be scrutinized for ascertainment as pre-importation component for addition to the assessable value. Prima facie, the value of engineering drawings is a post-importation cost. No evidence has been adduced to show that the provision of these drawings is conditional to placing order for equipment or that it is a pre-importation cost. Sans such a submission, we are unable to agree with Revenue that we must interfere with the impugned order. 14. The facts do not warrant the invoking of rule 9 supra. Likewise, mere supply of drawings at a value in the same agreement does not, ipso facto, have the support of law resort to rule 9 supra. Appeal of Revenue is dismissed. (Pronounced in Court 17 /08/2016) - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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