9911796707
TMI Blog2000 (12) TMI 154X X X X Extracts X X X X X X X X Extracts X X X X ..... he documents were to contain designs and drawings showing the outline of the sets to be installed, the layout, pipework, etc. so as to enable Hindalco to do the civil work necessary for the purpose of erection of the sets at site. 1.4The amounts payable by Hindalco to ABB under the contract were as follows :- For imported equipment and spares DM 21 million For indigenous equipment and spares Rs. 119.7 million For the technical service documents DM 11.7 million 1.5Under the second agreement, ABB was to supply the supervision manpower necessary for supervising the erection and commissioning by Hindalco. The agreement specified the types of experts ABB was to supply for supervision purposes and the expenses to be paid in respect of such personnel. 1.6The technical service documents were imported in two consignments. The first consignment was for 7 books of drawings and designs under invoice dated 8-12-1995 for c.i.f. value of DM 877,500 and covered by Bill of Entry dated 26-12-1995. The second consignment was of 30 books of drawings and designs under invoice dated 21-12-1995 for c.i.f. value of DM 10,828,500 and covered by Bill of Entry dated 21-1-1996. In the Bills of Entry the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de that designs and drawings which are imported as a condition of sale of machinery under another contract and because of which the value of such designs and drawings have to be loaded to the value of the machinery and equipments to be imported under the said separate contract have to be and/or can be classified or assessed with reference to the Tariff Heading of the corresponding machinery. There is no Tariff sub-heading contained in Chapter 84 of the Customs Tariff, which provides for such assessment or classification. Similar is the case under Section X in which Chapter 49 is contained and under Chapter 49 of the Customs Tariff there is no provision therein or in the Section Notes and Chapter Notes thereof which provides that designs and drawings imported as above can be or are to be classified or assessed with reference to the Tariff Heading of the corresponding machinery. Designs and drawings continue to be goods classifiable under Chapter 49 or the Customs Tariff and duty thereon has to be assessed and levied accordingly. The subject imports cannot be considered to be classified under Accessory (Condition) Rules, 1963 as machinery, since they have not been imported along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these designs and drawings, the imported components with spares will be of no value to the appellants. Secondly, the payment for the technical service charges is to be made under Article 7.6 of the Contract in the same ratio as main equipment. He has further held that it was essential for the appellant company to pay the technical service charges for "Two Steam Turbine Generator Sets" imported into India and to operate the same and this payment was to ensure that the appellant company got the Generator Sets which can be made operational and functional only with the help of these designs and drawings. It is submitted that the entire reasoning of the learned Commissioner is based on the assumption that complete Turbine Generator Sets are being imported. This is not the case. The true position is that the payment of technical service charges is not a condition of sale for supply of either imported equipment or indigenous equipment. The appellants undertook the responsibility for erection and commissioning of the Turbine Generator Sets and for this purpose they needed certain technical documentation to enable them to erect the steam turbine generator sets in India. The activities rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pment which was yet to be procured or imported or manufactured by the appellants; the value of the latter category of documents also being neither dutiable nor clubbable with the value of the imported goods." The aforesaid decision fully covers the facts of the present case. 2.7The payment terms for technical documentation were synchronised with the payment for imported equipments only because erection and commissioning in India require certain civil work and other activities which had to be done prior to the procurement of imported and indigenous equipments. This was done in order to avoid delay in the setting up of the plant. Such synchronisation cannot be considered as a condition of sale of the imported equipments. 2.8The learned Commissioner, in paragraph 3.4 of his Order, came to an erroneous conclusion that DM 11.7 million to be paid by the appellants to the supplier to technical documentation in terms of the first contract has got nothing to do with the erection cost which was to be borne by the appellants on their own separately in terms of the second contract. The second contract related only to the supervision activities to be undertaken by the exporter for setting up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch, dropped the same. There is no appeal by the Revenue against the above portion of the impugned Order of the Commissioner (Appeals). As such, we are only concerned in the present appeal to decide as to whether the provisions of Rule 9(1)(e) of the Customs (Valuation) Rules, 1988 are applicable to the facts and circumstances of the case. 6.Undisputedly, the appellants had entered into two contracts with their foreign supplier on 23-6-1994 - one for supply of two Generator Sets along with components and spares etc. and other for technical designs and drawings. The second contract was for supply of technical services in the form of documents and manuals showing the outline of the Sets to be installed and the lay-out and pipework etc. so as to enable the appellants to do the civil work necessary for the purpose of erection of the Sets at site and the manuals were to contain instructions for operating the said Sets. As such, as strongly argued by the appellants, the second contract was purely for supply of supervision-manpower necessary for supervising the erection and commissioning by the appellants. These technical service documents were imported under two consignments between 8-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had made any payment to the seller or to a third party in order to satisfy such an obligation. The price paid by the appellant for drawings and technical documents forming subject matter of contract of DM-301, can by no stretch of imagination fall within the meaning of 'an obligation of the seller' to a third party. There was also no payment made as a condition of sale of imported goods as such. Rule 9(1)(e) also, therefore, has no applicability. 8.By applying the law laid down by the Hon'ble Supreme Court to the facts and circumstances of the case, we note that neither of the conditions as detailed in the above judgment for applicability of Rule 9(1)(e) are satisfied in the present case. Admittedly, the second contract entered into between the buyer and the seller, is for the purposes of commissioning and installation of the plant. The Commissioner (Appeals) has referred to Article 2 of the contract wherein sub-clause (c) defines the nature of technical services provided. He has observed that the said technical services include drawings and the details of drawings had been provided in Annexure-D of the contract. Annexure-D in turns contains the drawings of the civil work to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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