TMI Blog2000 (8) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... s company has been formed on the basis of collective captive generation principle. This is a clear case of captive power plant. It has been set up by various industries which are engaged in activities other than power generation like cement, ferro alloys, sugar, plastics, chemicals etc. Hence, the appellants have to pay duty at the rate of 20% (Basic) + 2% (SCD) + 10% (CVD) as per Serial No. 206 (iii) of Notification No. 36/96, dated 23-7-1996. I uphold the order of the Assistant Commissioner in this regard. Further as per Rule 9(1)(b)(iv) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1983, engineering, development, art work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods are to be added to the price actually paid or payable on the imported goods. In view of this clear cut legal position, it has been rightly held by the Assistant Commissioner that the designing and engineering charges amounting to JY 227,882,000 are to be added to the assessable value. The case law in the case of Collector of Customs v. Visakhapatnam Steel Plant, 1992 (62) E.L.T. 833 (T) cited by the appellants is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue at the time of finalisation of the contract. 3. As regards the first issue, the legal position of inclusion or otherwise of designing and engineering charges is contained in Rule 9(b)(iv) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1983. In terms of Rule 9(b)(iv) engineering development network, design work and plant sketches undertaken elsewhere than in India and necessary for the production of the imported goods are to be added to the price actually paid or payable to the imported goods. The legal position on this point is therefore clear. The decision of the Tribunal cited by them is not applicable to this case for the following reasons : (a) In this case M/s. APGPCL have directly entered into an agreement with M/s. Sumitomo for design, engineering and supply of equipment and accordingly the charges are being paid to M/s. Sumitomo. The Tribunal decision dealt with a case of a Tripartite agreement involving M/s. V.S.P., M/s. Burn Standard M/s. Dolomite Works, and M/s. Burn Standard had entered into an agreement with M/s. Dolomite Works. (b) In this case M/s. APGPCL are importing directly from the supplier and paying the charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jeswaram will not only help in meeting the consortium members power demand but will also partially offset the demand on APSEB . Again in Annexure-1.2 of the DPR, it is stated that it is formed on the basis of collective captive power station. Instead of individual companies setting up their own Captive Power Stations in their factories, all have come together and formulated this company to set up a generating station. The most important feature in this venture is that it has got access to the technical expertise of the APSEB in the matter of setting up and operating the Generating Station and also the financial and enterpreneur capabilities of the industries. By pooling up the requirements of power of various industries, it is made possible to set up a large power station ensuring low per capita investment per KW at a very reasonable cost of generation. The main objective of the company is to set up, operate and supply power from the generating station at Vijjeswaram, near Kovvuru, West Godavari District, A.P., India, to all the industries who are shareholders of the company . From the above it is evident that instead of individual industries setting up individual captive pow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1%. (b) by extending the concession under Sl. No. 206 (iii) of Notification 36/96, dated 23-7-1996 and levying duty @ 20% (Basic) + 2% (SCD) + 10% (CVD). This assessment order is without prejudice to the final determination of assessable value at the time of finalisation of the contract. Asstt. Commissioner of Customs Sd/- (S.H. Tata) 3. Appellants have taken the grounds in the present appeal before us that they are entitled to the benefit of Sl. No. 206 (iv) and the exclusion clause against this Sl. No. does not affect them on a plain and simple reading of the notifica tion. They have pleaded that the profile of the shareholders of a registered company has to be kept separate from the identity of the corporate body and therefore the benefit of notification as claimed is eligible and there is no logic in the finding of the lower authorities they are being hit by exclusion clause under Sl. No. 206 (iv) of the said notification. There is no cause for lifting corporate veil. 4. As regards valuation, the appellants have taken the point that they are importers under the project import chapter 9801 and the project ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t company as captive power plant. It is therefore clear and unambiguous about the names of consumers, as the shareholders themselves are the actual consumers, holding 85% of the share capital of the Company. 6. He submits, exclusion clause in the Notification No. 36/96 at S. No. 206 (iv) makes it very clear that appellants definitely fall under the category of Projects engaged in the setting up of the Captive power plant and they have engaged themselves in activities other than power generation. 7. As regards valuation, he relied on the Supreme Court decision in the case of CC (Prev.) v. Essar Gujarat Ltd. - 1996 (88) E.L.T. 609 (S.C.). 8. In the rejoinder, Ld. Senior Advocate Shri Chandrasekaran submitted that he relied upon the Ministry s letter No. C-349/96-IPC. I, dated 24th October, 1996 addressed to Asstt. Commissioner of Customs (A) Visakhapatnam which reads as follows :- Kindly refer to your letter No. S-23/136/96-AP, dated 27-9-1996 and to this Ministry s letter of even No. dated 8-10-1996 regarding the proposal of Andhra Pradesh Gas Power Corporation Limited (APGPCL) for assessment and clearance of goods under heading 98.01 of the Customs Tariff Act, 1975 for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uding captive power plants set up by projects engaged in activities other than in power generation); 20% Nil (v) Power transmission projects of 66 KV and above; 20% 10% (vi) Other industrial plants or projects 25% 10% ANNEXURE Condition No. Conditions 60 In the case of goods required for the specified projects, the exemption under this notification shall not effect the exemption granted under any other notification of the Government of India in the Ministry of Finance (Department of Revenue) in so far as it relates to the duty of customs leviable under the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). The above is the relevant and true extract of Notification No. 36/96-Cus., dated 23-7-1996. A plain reading of the above would indicate that under Sl. No. 206 (iv) power generation projects including Gas Turbine Projects would be covered and the exclusion clause would be applicable only to such power generation projects including gas turbine projects which are set up by projects engaged in activities other than gas power generation. In trying ..... X X X X Extracts X X X X X X X X Extracts X X X X
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