TMI Blog1996 (2) TMI 283X X X X Extracts X X X X X X X X Extracts X X X X ..... t and coordinate all activities and supply some critical equipment, including the reactor and gas cooler. The plant including catalyst was imported on payment of duty treating the import as project import. 95% of the payment was to be made initially and the balance amount was to be made only on successfully commissioning the plant. The plant was commissioned in early 1986. Leak in the gas cooler supplied by Davy led to damage (fouling) to the catalyst supplied by PSA. The appellant insisted on replacement of the catalyst, which led to protracted three-way correspondence and negotiations. Ultimately, according to the appellant, the parties entered into a MOU dated 21-11-1986 whereby Davy undertook to assist and supervise in repair of the gas cooler and in the event of failure during the warranty period, to replace the entire gas cooler at its cost. PSA undertook to repair and regenerate the damaged catalyst free of cost and in case the catalyst after repair does not perform as per the terms of the contract, PSA undertook to replace the entire catalyst free of cost. Accordingly the defective catalyst was exported to PSA in February, 1987 after fulfilling the necessary formalities. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the new catalyst had been delivered to PSA even before the damaged catalyst was exported. Regarding valuation the Collector relied on PSA s letter dated 8-11-1982 offering a special price of DM 45,000 for delivery of ring catalyst in mid 1985 for complete charge of `R3 type catalyst, the insurance certificate dated 15-4-1987 of the consignment in question which declared the value of `R type catalyst DM 3,98,000 and which further showed that the amount of insurance accounted for 110% of the value. The Collector also placed reliance on the reply telex of Davy to the Customs telex seeking information. The Collector disregarded certain materials such as telex messages exchanged between the appellant and the parties abroad. It was thus the value was determined as DM 3,98,000. 5. Two aspects arise for consideration of the appeal. The first is whether what was imported was the old XD type catalyst (purchased in 1985, subsequently damaged/repaired and regenerated at the instance of PSA at a cost of DM 9,500 but free of cost to the appellant or whether the imported catalyst was a brand new `R type catalyst. The Collector held that it was a new `R type catalyst and not the old cataly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the goods as one charge of catalyst consisting of two R1 type catalyst weighing 4716.8 Kgs. and 67.0 Kgs respectively, and two R2 catalyst weighing 4106.4 Kgs and 50.4 Kgs. respectively, the total weight being 8940 Kgs. which tallies with the weight given in the other connected documents. The Bill of Entry also refers to the catalyst as R1 and R2 type. The originally imported charge of catalyst was XD type weighing 11,800 Kgs. The letter relied on quotes 3,90,000 DM as the price of R3 type catalyst, which was a new development in respect of which R and D costs had not been recovered. It was an improvement over existing products, which must include types XD, R1 and R2. The Department did not attempt to collect the price of any year of R1 and R2 type catalyst or to verify if R and D cost of such type of catalyst had or had not been recovered. This circumstance has an important bearing on the price structure. The letter clearly stated that R and D cost of XD type had been recovered, which was reflected in the comparatively lower price of DM 2,63,000. The letter makes no reference to R1 and R2 type. This of course may have been a type introduced after XD type. There is nothing to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cost of an additional catalyst that would become necessary to supply free of cost to the appellant in case the former does not perform as per terms of contract and hence the insurance value DM 4,37,800 cannot be taken as merely 110% of the price of one catalyst. The Collector sought corroboration from the alleged assurance given by Insurer in a telex sent in reply to the departmental query. The telex reply of PSA does not refer to any assurance ; on the other hand, it refers to assumption . The Insurer said they were not in a position to clarify as knowledgeable staff were not available and from L/C provisions it was assumed that DM 4,37,800 was 110% of the price. The assumption made by the Insurer nearly one year after the event and without verifying the insurance proposal or other records or consulting the then staff familiar with the transaction cannot be a corroborative circumstance. The case set up by the appellant that DM 3,98,000 represented something more than the value of imported consignment was not a subsequent development. It was spelled out by PSA even as far back as 10-6-1987, that is, two years prior to the show cause notice. As indicated already, there is nothin ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
