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2016 (12) TMI 320 - AT - CustomsLevy of duty - drawings and designs - imported by the appellant for construction activity of various hotels - whether drawings and designs are goods so as to attract duty liability under customs act? - Held that: - The issue as to whether drawings and designs are goods or otherwise, is now settled by the apex court in ASSOCIATED CEMENT COMPANIES LTD. Versus CC [2001 (1) TMI 248 - Supreme court of India] wherein it has been held that drawings and designs are goods. Respectfully following the same judgment, we hold that drawings and designs imported in all these appeals are goods liable to customs duty. Valuation - correct value or levy of customs duty - Held that: - the adjudicating authority after perusing the contract came to a conclusion that the total consideration, compensation paid by the appellant to overseas party to US $3,45,000 needs to be reduced to $35,000 which was not in respect of drawings and designs, was for inspection and installation. We find this impugned compensation is for research and concept design, preparation of plan elevation, and furnace specification and preparation of loose furnishing specification. In our considered view, all these three items as mentioned in the contract would fall under the category of drawings and designs, hence the adjudicating authority was correct in holding that these amounts are to be considered as transaction value for discharge of customs duty - However, since in other orders, the adjudicating authority has given a further deduction of 10% from the transaction value, the same ratio needs to be applied in this case also. Accordingly, out of total US $3,10,000 further 10% discount is to be granted to appellant and transaction value has to be arrived accordingly and the duty liability to be reworked out. The entire agreement talks about preparing drawings and designs for activity for hotels and rooms. In our view, the contracts are not composite contracts. In order to consider them as composite contract, clause of the scope of work is read; in all these contracts appellant had contracted for drawings and designs only j hence the plea of the Id. counsel that 1/3rd of the value of the contractual compensation should be considered for discharge of customs duty is not acceptable and the proposition is rejected. In our view, the adjudicating authority has been fair to extend 10% of the contracted compensation as abatement in respect of these contracts for arriving at the correct value for discharge of customs duty. We do not find any unreasonableness in the order passed by the adjudicating authority. In view of this, we uphold the impugned order in all these appeals and reject the appeals on valuation issue. Imposition of penalty - Held that: - In our view during the relevant period in question, the issue of whether drawings and designs have to be considered as goods for levy of customs duty was in dispute and had to be decided by the apex court. In view of this, visiting the appellant with penalty is unwarranted. Accordingly, penalties imposed on the appellant are set aside. We uphold the demand of the customs duty and the interest thereon as indicated herein above and set aside the penalties - appeal disposed off.
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