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TMI Blog2008 (10) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... rted for manufacture of Torch Light would attract Anti-Dumping Duty under Notification No.125/2003-Cus. dated 13.08.2003, wherein Anti Dumping Duty has been imposed on the Non Brass Metal Flash Light (in compact and SKD condition)? 2. In view of the objections raised regarding the maintainability of this application, both sides were heard before taking up the case on merits. 3. The applicant is a proprietary concern of Shri Ram Niwas Aggarwal who has filed this application as Proprietor. The applicant states that it entered into a Memorandum of Understanding (hereinafter referred to as MOU) on 24/9/2007 with an overseas company by name Dynamic Exports (P) Ltd. incorporated under the laws of HongKong and having its registered office in HongKong. The purpose of MOU is stated to be to collaborate together for manufacturing and marketing of Metal Torches / Flash Lights in India. Dynamic Exports (P) Ltd., is a company formed by the applicant's brother Shri Aggarwal Rajesh Kumar on 14.8.2007, who at the time of application held all the shares of the company and was the sole Director. Subsequent to the filing of the application, the applicant brought to the notice of this Authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of anti-Semi-knocked down dumping Duty on the Flash Light parts imported in the past by the applicant and his associates is pending adjudication. The Directorate of Revenue Intelligence has issued show cause notices in this behalf to the applicant and others. The allied submission is that the applicant has an ongoing activity of assembling torch lights and imports were made in the past for this purpose. Hence, it is no longer a proposed activity which is a pre-requisite for making an application for advance ruling. It is then contended by the Departmental representative that the present application does not conform to the definition of 'applicant' in clause (c) of section 28-E of the Customs Act. It is the contention of the Department that the ingredients of joint venture as defined in the Explanation to section 28-E (c) are not satisfied for two reasons : (i) the MOU in the instant case cannot be construed as a contractual arrangement and (ii) the control and substantial interest of Dynamic exports (P) Ltd. is not established. Further, it is submitted that the non-resident status of Dynamic Exports (P) Ltd. has not been satisfactorily established and therefore the requirement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice, it is alleged that the applicant and others imported the torch light in 'semi/completely knocked-down condition' by mis-declaring that only some components were being imported and thereby evaded the anti-dumping Duty. What calls for determination in this application is a legal question and no controversy on a factual issue is involved. The gravamen of the charge against the importers including the applicant is the mis-declaration of goods imported in order to get out of the clutches of the notification No.125/2003 for the purpose of evading the duty. That question has a different dimension and it has little bearing on the question formulated in the application. The question raised in the application is a straightforward question i.e., whether anti-dumping Duty will be attracted or not in terms of the notification no.125/2003-Cus., if 4 specified parts of the flash light are imported and the finished product is manufactured in the proposed unit with the aid of the parts imported, the parts purchased from the domestic market and the parts manufactured within the proposed manufacturing unit. 10. The second contention of Revenue is that the activity of import by the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t' instead of 'contract'. 'Contractual arrangement' is definitely wider in scope than the expression 'contract' which obviously means an agreement enforceable by law. Section 10 of the Indian Contract Act declares that "all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void". If the agreement is not enforceable by law, it is said to be void. It is trite that mutual promises gives rise to an agreement. A promise or a set of promises resulting in an agreement and an agreement culminating into a contract enforceable by law - these are the facets integral to the concept of contract. Then, what does 'contractual arrangement' mean Certainly, it is not the same thing as contract. It can fall short of a contract. It may be a step in aid to a contract. It may be a broad framework within which a contract will be concluded. Though not enforceable in law, a contractual arrangement should clearly reflect the understanding of the parties on the material terms that form the basis of a formal agreement to be entered into later. 14. The adjective 'con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement' is intended to carry a wider meaning than the expression 'contract'. We cannot therefore accept the Revenue's extreme contention that the existence of a contract as per the strict requirements of Indian Contract Act is a sine qua non for invoking the jurisdiction of this Authority. Such construction also goes against the settled principle of interpretation that a remedial provision should be liberally construed in favour of the subject. 18. Next, we turn our attention to the crucial point, i.e., whether on a reasonable construction, the MOU spells out a "joint venture in India" within the meaning of the Explanation to Section 28-E(c) of the Act. Of course, we approach this question keeping in view the wider meaning attributable to the phrase 'contractual arrangement' as discussed supra. 19. On a close perusal of the MOU, we are inclined to reject the contention of the applicant's counsel that the MOU brings into existence a joint venture as defined in the Explanation The MOU has ostensibly been entered into to set up a manufacturing facility for Metal Torches / Flash Lights. Clauses (2) and (3) purport to set out the terms of investment. The two clauses are so vague ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he two crucial ingredients of joint control and substantial interest. The fact that clause (5) expressly states that a separate agreement for induction of capital and sharing of profits would be negotiated for and concluded separately is a clear pointer that by entering into MOU, the parties have not made a serious effort to spell out the terms of Joint Venture with reasonable certainty. 20. When it was pointed out to the applicant in the course of hearing that the terms of MOU are too vague and nebulous to give rise to a contractual arrangement containing material terms, the counsel for the applicant pointed out at the next date of hearing that the terms of MOU have since been translated into action by forming a new company by name Tulsi Electronics (P) Ltd with both entities having equal stake therein and therefore the relevance of MOU has paled into insignificance. In the affidavit signed on 24 th June, 2008 it is stated by Ram Niwas Aggarwal (applicant) that Tulsi Electronics (P) Ltd. has been duly incorporated on 11/6/2008. A true copy of Company's details downloaded from the official website of Registrar of Companies, Delhi was annexed to the affidavit. It is interestin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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