9911796707
TMI Blog2000 (2) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... eel making capacity, SNP decided to cancel its investment plan and to sell the equipments and materials which were lying unused from 1981 to 1986. On 14th April, 1988 a protocol was signed between the seller and purchaser companies (i.e. SNP and TISCO) which inter alia stated that the total price will be price for the equipment plus price for the engineering FOB Portugal-Lisbon port. The price for the equipment with suitable sea-worthy packing to be provided by SNP will be 13.5 million Deutsche Marks (DM) and the price for engineering will be 12.5 million Deutsche Marks. The protocol also provided that the equipment was being sold without any operation on performance guarantees and in "as is where is" condition. Subsequently on 11th October, 1989 three contracts were entered into between the parties as under :- 1. Agreement for supply of technical documentation - called MD 301. 2. Agreement for sale of equipments and materials (part of equipments of a blast furnace and three torpedo ladle cars) - called MD 302. 3. An overall sale contract, being an umbrella contract, covering the above said two agreements for establishing contractual relationship and setting up conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mining the assessable value of the goods imported under the contract MD 302 followed by other consequences flowing from under-valuation of the goods imported. Vide order dated 10-8-1990 the Assistant Collector permitted clearance of the goods upon furnishing of bank guarantees of Rs. 7,44,80,300/- and extra duty deposit of Rs. 2,82,01,636 as also payment of admitted customs duty. 5. The appellant filed a writ petition before the Orissa High Court challenging the show cause notice and the demand raised by order dated 10-8-1990. On 30-8-1990, the Orissa High Court disposed of the writ petition directing the release of the goods subject to furnishing a bank guarantee of Rs. 8 crores and depositing the extra duty reduced by 1 crore than that demanded, accompanied by payment of admitted customs duty. The appellant complied with the order of the High Court and got the goods cleared. 6. The appellant also filed a reply to the show cause notice. Personal hearing was given by the Assistant Collector. On 23-8-1993 the Commissioner of Customs and Central Excise, Bhubaneswar issued a second show cause notice to the appellant and two of its officers and also to the appellant's engineering con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o (i) the imported equipment and (ii) the equipment which was yet to be procured or manufactured by the appellants. It may also contain (iii) technical documents which are related to post-importation activities undertaken by the appellants for assembly, construction, erection, operation and maintenance of the imported equipment. Value of two categories of documents at (ii) and (iii) above could be excluded, had these values been separately shown in the contract, MD-301 or invoices. Since separate values have not been shown, support from Interpretative Note to Rule 4 of the Valuation Rules, proposed by the ld. Advocate Dr. Chakraborty cannot be taken. Hence the entire value of 12.5 million DM of technical documentation will have to be included in value (13.5 million DM) of the equipment of B.E. and T.L.Cs." [Para 6.2. II] "Claim of the appellant's Counsel that these are separate contracts is not tenable. Article 2 relating to "Price" and Clause 1 thereof makes it abundantly clear that "over-all price of the sale scope of the present contract is fixed and not subject to any revision and amounts to DM-26 million" giving a break-up of the same in 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods liable to payment of customs duty and thereupon determine the quantum of duty and penalty, if any, for the reasons stated hereinafter. 11. A perusal of the order of the Tribunal shows that it has mainly proceeded on two sets of reasoning for holding against the appellant. Firstly, the Tribunal has examined the applicability of Rule 9(1) (b) (iv) and formed an opinion that benefit thereof was not available to the appellant. By reference to the Interpretative Note to Rule 4 it has held that to the extent the drawings and technical documents were referable to the manufacture and sale of the imported equipments, their value was liable to be included in the value of the equipments and material imported and inasmuch as separate values thereof have not been shown the entire value of 12.5 million DM of technical documentation covered by contract DM 301 was liable to be included in the value of the equipments. Secondly, the Tribunal has held the provisions of Rule 9(1)(e) being attracted and coming into play for the purpose of determining the valuation of the equipment and materials imported on the reasoning that the drawings and engineerings were compulsorily purchasable by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e production of the imported goods; (iv) engineering, development, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods; xxxxxx xxx (e) all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable. xxxxxx xxx (3) Additions to the price actually paid or payable shall be made under this rule on the basis of objective and quantifiable data. (4) No addition shall be made to the price actually paid or payable in determining the value of the imported goods except as provided for in this rule.[emphasis supplied]. 13. Reference has also been made by the Tribunal to the Interpretative Notes. Rule 12 provides that the Interpretative Notes specified in the Schedule to these rules shall apply for the interpretation of these rules. Note to Rule 4 reads as under :- " Note to Rule 4 Price actually paid or payable The price actually paid or payable is the total payment made or to be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f is liable to be added to the value of the imported goods for determining the transaction value. In the case at hand it is nobody's case that the buyer had supplied any goods or services free of charge or at reduced cost for use in connection with the production and sale for export of imported goods. All the exercise done by the Tribunal in scrutinizing the documents forming subject matter of contract DM 301 so as to classify them into three categories stated earlier in this judgment was therefore uncalled for. SNP had purchased the entire steel plant equipment from an Italian supplier more than six years before the transaction in question had taken place with the appellant. Such documents must have accompanied the equipments and materials made available to SNP by the Italian supplier of SNP. It cannot be comprehended and certainly it is not the case of the Revenue that the technical documents were supplied or made available by the Italian supplier to SNP either free of charge at the instance of the appellant or cost thereof was incurred wholly or partially by the appellant. 15. Clause (e) of sub-rule (1) of Rule 9 is attracted when the following conditions are satisfied :- Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uggestive of charges for services rendered by the seller in connection with construction, erection etc. of imported goods. The value of documents and drawings etc. cannot be "charges for construction, erection, assembly etc." of imported goods. Alternatively, even on the view as taken by the Tribunal on this Note, the drawings and documents having been supplied to the buyer-importer for use during construction, erection, assembly, maintenance etc. of imported goods, they were relatable to post-import activity to be undertaken by the appellant. Such charges were covered by a separate contract, i.e. contract MD 301. They could not have been included in the value of imported goods merely because the value of documents referable to imported equipments and materials was mixed up with the value of those documents which were referable to equipment which was yet to be procured or imported 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. The Tribunal has not doubted the genuineness of the contracts entered into between the appellant and SNP. Rather it has observed vide para 10.2 of it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal the Revenue has kept its plea alive. Vide para 7 of its order the Tribunal noted this plea of the Revenue but did not go into it as the Tribunal considered it not necessary in view of other findings arrived at. The learned Additional Solicitor General submitted that if this Court may not sustain the order of the Tribunal then in all fairness the Revenue should be allowed an opportunity of substantiating its plea of under-valuation followed by such other relief to which it may be entitled in the event of its succeeding on its plea. We find merit in this submission. In our opinion on the order of the Tribunal being set aside the matter needs to be sent back to the Tribunal for examining on merits the above said plea of the Revenue which was refused to be gone into earlier on account of its having been found to be unnecessary. 19. The appeal is allowed. The impugned order of the Tribunal is set aside. The case is sent back to the Tribunal to entertain and examine the plea of the Revenue if the contract DM 302 is undervalued on the basis of the material already available on record. The Tribunal shall consistently with the observations made and findings recorded in this judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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