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2005 (3) TMI 612 - CESTAT, MUMBAIAssessable value of imported goods - Valuation of the machinery - charges for setting up of plant in India - Payment of design, engineering, consultancy etc. and technical know-how fees - registration of contract for import of plant and machinery - agreement between the supplier and the buyer for supply of equipment - difference of opinion between the two members - Third member Order - Whether the charges payable as technical assistance towards manufacture of the finished goods by the importer are to be included in the assessable value? - Whether the charges for erection and commissioning of the plant were includible in the value? - Order per : G.N. Srinivasan, Member (J) - HELD THAT:- The agreement to acquire know-how and technical information has been made in conjunction with the purchase of machinery and fact that the technical information and know-how is nothing but the licence fee related to the imported goods that the importer is required to pay directly as a condition of the sale of the imported goods, which is clearly covered under Rule 9(1)(c) & 9(1)(e) of the CVR, 1988. Therefore the payment of DM 3,75,426 subject to taxes i.e. net DM 2,57,167 is to be added to the transaction value. Therefore imparting training at the supplier’s factory is actually a method of transfer of technology and know-how by the supplier to the importer and it is not related to the post-importation activities to be undertaken on imported goods in India. Therefore this payment falls within the scope of Rule 9(1)(c) and 9(1)(e) of the CVR, 1988. Therefore the payment of DM 4,39,786 subject to taxes are net of DM 3,01,254 is also to be added to the invoice value of the equipments being supplied by the collaborator to arrive at the transaction value. We are therefore of the view that reading both contracts as a whole the assessee’s case cannot be accepted but only the department’s case is to be accepted. Hence varying the impugned order, we restore the order of the Assistant Collector. Contra per : Gowri Shankar, Member (T) - HELD THAT:- The machinery of course was for the manufacture of contract order. However, it is not a condition in the contract of sale of such machinery, that know-how for manufacture of contract product must be paid. The agreement for the sale of the capital goods does pot stipulate that the sale and purchase of this equipment shall not be concluded unless payment is made for know-how relating to use of the particular machine. The importer was at liberty to obtain the know-how elsewhere. The fact that the contract is to be read as one, on which my colleague has placed emphasise is thus irrelevant. Unless this is shown to be fictional and there is material to show that the erection is to be done only by the supplier of the goods, it will follow that these charges were not payable as a condition of sale of the imported goods and therefore the value is not to be included in the assessable value. It is in this context, that the importer has cited the judgment of the Supreme Court in CCE v. Essar Gujarat Ltd. [1996 (11) TMI 426 - SUPREME COURT], and in my view is correct. In my opinion, therefore, neither of these charges were includible in the assessable value and the importer’s appeal is allowed and the Commissioner’s appeal is dismissed. Order per : Krishna Kumar, Member (J) - HELD THAT:- The reliance of the ld. DR on Ms. Essar Gujarat [1996 (11) TMI 426 - SUPREME COURT] is misplaced for the simple reason that in that case the second-hand plant was imported and the know-how fees etc. were paid by the importer to the person other than supplier who were not related to the supplier. Whereas in the case in hand the supplier of the goods is also the collaborator who is directly receiving the fees. Therefore, applying the ratio of the decisions relied on by the ld. Counsel, I am of the opinion that the order passed by the Member (T) deserves to be accepted. MAJORITY ORDER - We hold that the technical assistance charges and charges for erection and commissioning of the plant are not includible in the assessable value of imported goods and hence allow the appeal of the importer and dismiss the appeal of the Revenue.
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