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2015 (11) TMI 1025 - AT - CustomsValuation of goods - Inclusion of amount paid towards design / engineering charges used for manufacture of imported equipment and technical know-how fees - loading of charges paid by the assessee towards basic engineering, design, drawing and technical know-how paid to CCI on the imported equipments i.e. ID sterilizer doors, Screw Press P5 and centrifuge imported under two Bills of Entry - Held that:- As per original agreement the Indian entity SCI agreed to set up the palm oil plant to the appellant and it includes imported as well as indigenous machinery and equipments installation and erection of palm oil plant. Thereafter the SCI assigned the said contract to CCI another Indian entity who signed MoU with TSDN, Malaysia for technology transfer as well as for setting up of palm oil plant in India to any potential buyer in India only through CCI. On perusal of the records, we find that the appellant GAVL was to procure the equipment only from SCI. Due to RBI restrictions of opening of LC, SCI requested the appellant to place order directly with TSDN Malaysia only for three equipments i.e. ID sterilizer doors, screw press P5 and Centrifuge. By virtue of this understanding, the appellants placed purchase order with TSDN for import of these three equipments. There is no direct agreement entered into between the appellant with TSDN for any transfer of technical know-how or for supply of engineering and design or for installation and erection of the palm oil plant. Basic engineering and design supplied by TSDN to CCI relates to lay out drawings of the palm oil plant, assembling and drawing of palm oil plant. Clause 3 of Appendix I provides a complete list of documentation, specifications, piping, valve, instrumentation for the entire setting up of the palm oil plant. Nowhere in the MoU there is any mention that the design, basic engineering designs are related to the imported goods in question. It is pertinent to state that the appellant GAVL has entered into contract with SCI vide No.1182 dated 28.11.1997. As per this contract, they placed revised purchase order dated 9.3.1998. As per this contract between GAVL and SCI, the supply of equipment to be made in India for an amount of ₹ 1.92 crores, technical know-how fee of ₹ 50 lakhs, the detail engineering of ₹ 27.32 lakhs. There is nothing on record to establish any payments made between CCI and TSDN towards the design fees etc. except it is provided in the clause 3.1.2 of the MOU. Further, it is seen from the contract between appellant and SCI/now CCI that nowhere it is shown or agreed that the appellant has to pay the engineering charges towards the imported equipment or it is a condition of sale. In the absence of any evidence Revenue cannot assume that amount paid by the appellant to CCI an Indian counterpart was directly related to engineering design charges and design charges towards imported goods. Further, we find that this is not the case of a related transaction between the supplier i.e. TSDN and GAVL. The appellant directly placed purchase order with TSDN for supply of impugned goods covered in the Bill of Entry. No doubt this import has been made as per the recommendations of the SCI/CCI and this cannot be construed that GAVL and TSDN are related unless it is established with clear evidence. There is no agreement between GAVL and TSDN for transfer of know-how or supply of goods or payment of royalty. The appellant imported the impugned equipments goods from TSDN Malaysia as per their purchase order No. 1239 dated 9.1.1998. Basic engineering fee charges paid by the appellant to CCI are not related to the imported goods. In this regard, we rely on the decision of the Hon ble Supreme Court in the case of TISCO Vs. CCE (2000 (2) TMI 91 - SUPREME COURT OF INDIA) wherein the Hon ble Supreme Court has held that drawings and documents used for construction, erection and assembling are not includible in the assessable value. - engineering fees of ₹ 27.38 lakhs paid by the appellants to CCI is not includible in the imported goods. Accordingly, the demand of differential duty confirmed in the impugned order is liable to be set aside. Consequently, the confiscation and penalty are also set aside. As rightly held by the adjudicating authority, Rule 9(1)(c) is not applicable to the present case. In this regard, this Tribunal in the case of Saint Gobain Glass India Ltd. Vs. Commissioner of Customs, Chennai - [2014 (8) TMI 47 - CESTAT CHENNAI], on identical issue held that design fees, transfer of technology know-how for manufacture of goods are not relatable to the imported goods and allowed the appeal. - both engineering & design charges and technical know-how fees are not includible in the assessable value and Rule 9(1)(b)(iv), 9(1)(c) and 9(1)(e) are not applicable and we hold that the invoice price is to be accepted as the actual transaction value. - Decided against Revenue.
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