TMI Blog2003 (1) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... designs, toolings, etc., of the relevant technical information that was required and was available with them. The appellants were to pay ACE one time technology fee of Rs. 45 lakhs in terms of Para 3 of the Agreement. The Agreement was registered with the Reserve Bank of India. An amount of Rs. 45 lakhs in terms of the Collaboration Agreement was payable. From the Certificate of Deduction of Tax at Source (u/s 203 of the Income-tax Act, 1961) dated 31-3-95, issued by the appellants, it can be seen that an amount of Rs. 31,61,000/- was credited on 7-3-95. It was observed from the letter of Pantex, USA, that they were the owners of technical know-how by way of drawings, flow charts, documents, product designs and tooling, etc., for mass production of Pneumatic and Hydraulic Actuators and other equipment and this technical know-how which was held by them as capital assets were delivered to the appellants for a consideration of Rs. 45 lakhs. (ii) Similar agreements were also entered into with M/s. Pantex, USA of Buy back and to transfer to the appellants the technology pertaining to actuators and models 067, 084, 114 and Accumulators models 5G, 7G and 11G. Also, in Para 2 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared through Mumbai Customs, incidentally Derrick C. Pepperell had also visited India in connection with the requirement of the appellants and had also sought clearance from Mumbai Customs. Further, B.Y. Murthy did not honour the commitment of furnishing the designs and technical data brought by Dr. Raju Vanguri of Pantex and Derrick C. Pepperell of ACE, the foreign collaborators, as technical know-how, for scrutiny as undertaken by him in his statement dated 16-4-98. Subsequently, on 15-9-98, Dr. B.Y. Murthy vide his letter dated 10-9-98, retracted his statement dated 16-4-98. (vii) The Show Cause Notice alleged that the drawings and designs, appearing in Chapter 49 of the Customs Tariff Act, 1975, have been imported as part of the baggage and therefore, were classifiable under Chapter Heading 98.03 of the Schedule to the Customs Tariff Act, 1975. They are, therefore, assessable to customs duty at 100% during 1994-95 in terms of Notfn. No. 136/90-Cus., dated 20-3-90. (viii) The Show Cause Notice further alleged that, the appellants were aware of the provisions of the Customs Act and the Regulations in terms of which the import of drawings and designs attract customs duty u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 28AB of the Customs Act, on the said amount of Rs. 90 lakhs confirmed and adjudged payable under proviso to Section 28 of the Customs Act. (iv) The goods namely product designs, drawings, flow charts and documents are held to be liable for confiscation under Section 111 of the Customs Act. However, he imposed a fine of Rs. 10 lakhs in lieu of confiscation. (v) He imposed a penalty of Rs. 90 lakhs under Section 114A of the Customs Act on M/s. Pantex Geebee Fluid Power Ltd. Hence this appeal. 5. After hearing both sides and considering the submissions made and the material on record, it is found : - (a) The Commissioner in the impugned order in Para 8 has found as under : - 8. In view of the aforesaid discussion it is held that M/s. ACE International Services, UK and M/s. Pantex Valve Actuators Systems Inc., USA, the foreign Collaborators had transferred the technical know-how, held by them as capital assets in the form of Product Designs, Drawings, Flow Charts, relevant technical data etc. to M/s. PGFP, Hyderabad on receipt of Rs. 90 lakhs, as one time technology fee. The consideration of transfer of technology was more than Rs. 90 lakhs as the Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l know-how information by way of Drawings, Flow-Charts, Documents, Product Designs, Tooling etc. for mass production of pumps and other equipments and we have been holding such technical know-how as capital asset in our hands which was transferred, to you for consideration of Rs. 45,00,000/-. On payment of Rs. 45,00,000/- to us your company becomes the owner of the technical know-how relating to mass production of pumps and other equipments and may deal with it as your company like. We have no permanent establishment in India within the meaning of the term permanent establishment as per Double Taxation Avoidance Agreement between India and UK. Letter of M/s. Pantex : Pantex is the owner of technical know-how by way of drawings, flow-charts, documents, product designs and tooling etc. for mass production of pneumatic and hydraulic actuators and other equipment. This technical know-how is held as capital assets in our hands which was delivered to you for consideration of Rs. 45,00,000/- only on payment of Rs. 45,00,000/- to us, your company becomes the owner of such technical know-how relating to mass production of pneumatic and hydraulic actuators and other equipment and may dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in special session, establish a comprehensive work programme to examine all trade-related issues relating to global electronic commerce, including those issues identified by Members. The work programme will involve the relevant World Trade Organisation (WTO) bodies, take into account the economic, financial, and development needs of developing countries, and recognize that work is also being undertaken in other international fora. The General Council should produce a report on the progress of the work programme and any recommendations for action to be submitted at our third session. Without prejudice to the outcome of the work programme or the rights and obligations of Members under the WTO agreements, we also declare that Members will continue their current practice of not imposing customs duties on electronic transmissions. When reporting to our third session, the General Council will review this declaration, the extension of which will be decided by consensus, taking into account the progress of the work programme. Since India is stated to be a signatory to this agreement, therefore, the customs authorities will be bound by this decision not to charge duty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advice or information technology, an intangible asset, but the moment the information or advice was put on a media, whether paper, cassettes or diskettes or any other thing, that was supplied becomes chattel . Bound by this finding, when we find that no chattels have been located in this case, then it has to be found that there was no cause for recovery of customs duty, merely because certain amounts were remitted towards technical know-how. (e) Taking up the alternate plea of the appellant and in view of the finding arrived at that the imports were made through two passengers viz., Dr. Raju Vanguri and Mr. Derrick Pepperell, it is found that no allegations about their having been brought the subject tangible goods at the time of their clearance through Bombay Airport have been made in the Show Cause Notice. In fact, the notice does not give any dates of arrivals or departures of the various executives of the two foreign collaborators. It was the appellant who brought these facts on records and submitted that their movements and visits were as follows : - Name of the Executives Month of Visit Dr. Vanguri March, 1990 Randy Rejona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e articles and, therefore, no customs duty was leviable thereon even as a part of the passenger baggage. On this short ground alone the appeal of Videocon has to be allowed. The imports, of these, if made by Mr. Derrick Pepperell in November, 1995, then dutiability has to be considered in light of the above observations of the Supreme Court. These observations will not entitle a demand to be made on the said appellants. The demand of duty for the goods in baggage imported has to be on Mr. Derrick Pepperell, if at all, he has imported the information know-how as tangible goods. The demand being made on the appellants cannot be justified especially when no goods are under seizure. If there were goods under seizure, the demand of duty under the provisions of Section 125(2) of the Customs Act can even be made on the owner of such goods i.e., the present appellant who would become the owner after such transfer was effected. From the extracts at Para 2(ii) herein above, it is observed that M/s. Pantex was paid on 10-3-95, only an amount of Rs. 31,96,000/- and not full consideration. Therefore, when the goods if at all they were imported by Mr. Derrick Pepperell in November ..... X X X X Extracts X X X X X X X X Extracts X X X X
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