9911796707
TMI Blog2006 (7) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... guarantee furnished by the appellant shall be kept alive and the amount deposited shall also continue to remain in deposit till the date of decision by the Tribunal whereafter the bank guarantee and the deposit shall be dealt with consistently with the order of the Tribunal. 20. Though we have set aside the order of the Tribunal and made a remand we would like to clarify a few points. Apart from the appellant, two officers of the company namely Dr. J.J. Irani and Shri S.L. Shrivastava and an engineering consultant of the appellant, namely M/s. M.M. Dastur & Co. were also proceeded against and penalties were imposed on them. They were exonerated by the Triounal. The Revenue has not come up in appeal against the order of the Tribunal exonerating the above said three. This order of remand would not reopen the proceedings against those three. Similarly, the Tribunal has held that the duty liability of the appellant in spite of a finding of under-valuation could not be re-determined by pegging the value of the equipment at an amount over and above 21.2747826086 million DM as this was the figure found by the adjudicating officer and not challenged by the Revenue. The amount of pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pments to value of technical documents and drawings imported under contract MD 301, "consistently with the observations made and findings recorded" in its judgment by the Supreme Court (para 19). 3. In the said order, impugned herein, the Commissioner has, besides quoting with approval the findings contained in the earlier order dated 3rd April, 1996 on the issue, has given his further reasonings, in support of the purported conclusion arrived at, in paragraphs 21 to 23 (at pages 71-72) of the order. 4. Elaborating further of the aforesaid findings of the Commissioner, it has been contended on behalf of the respondent before this Hon'ble Tribunal that the transfer of part of the equipment cost to the technical documents cost has taken place in the instant case because of non-inclusion of the price of the following in the price of the equipments imported under MD 302 :- (i) Price of drawings and technical documents for site erection work to be done in India. (ii) Price of drawings and technical documents for subsequent maintenance of the blast furnace of torped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specifically the drawings and technical documents for "site and erection engineering". This is further split up into four categories namely "(i) site lay-out and basic information for amenities, (ii) technical specifications and general drawings for erection tests and start up, (iii) manpower estimation and (iv) means for erection definition". Similarly, in respect of technical documents for T.L.C's (in section II of Annex. I), there are different "drawings for manufacture" and instructions for assembly and "instructions for commissioning as already extracted above. If one takes a look at page 788 of the paper book (Vol.-V), it will be observed that 3 Nos. "Torpedo Ladle Cars" having weight of 540 tons in S.N. Project is being supplied under the contract and no part thereof is to be manufactured or purchased in India, yet detailed drawings as indicated by use of symbol "D" in the table at page 788 (supra) and listed in Section II to the broad categories of drawings at page 747 (Vol. V-paper book) have been supplied. This belies the statement of the appellants that drawings for manufacture of only those parts not supplied by S.N. have been supplied. Similar examples can be found re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... included in the value of imported goods merely because the value of documents referable to imported equipments and materials was mixed up with the value of those documents which were referable to equipment which was yet to be procured or imported or manufactured by the appellant, the value of the latter category of documents also being neither dutiable nor clubbable with the value of imported goods......". 10. It is submitted that, in view of the aforesaid finding of the Supreme Court, none of the above two items mentioned in paragraph 4 hereinabove, can be included in the price of the equipments imported under MD 302, and consequently in determining assessable value thereof for the purpose of levy of customs duty. Therefore, on this ground it cannot be contended or held that there has been under-valuation of the equipment price by the appellant by transferring a part of the price thereof to the price of technical documents imported under MD 301. 11. In this respect it is also relevant to refer to the Annexure-I of MD 302 (Equipment Contract), which contains, inter alia the items sold under the contract. Sl. No. 7.1 thereof (at page 161 of Vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith regard to the purported findings contained in paragraphs 16 to 19 of the said order, wherein the Commissioner has quoted with approval the purported findings contained in the earlier order dated 3rd April, 1996, it is submitted as hereunder. 19. It is submitted that the said order has been passed by the Commissioner without taking into consideration not only the findings of this Hon'ble Tribunal as contained in the order dated 20th February, 2001 but also the detailed submissions made by the appellant (in short 'TISCO') contained in inter alia the Written Notes of Argument filed before the Commissioner (at pages 1A to 20 of the Appellant's Paper Book-Volume I). This by itself has rendered the said order untenable and unsustainable. In this respect reliance is placed upon, inter alia the following decisions :- (i) Jai Bhawani Steel Enterprises Ltd. v. Commissioner of Central Excise, 2003 (157) E.L.T. 427 (T). (ii) Youngman Hosiery Factory v. Commissioner of Central Excise, 1999 (112) E.L.T. 114 (T). (iii) Banco Aluminium Ltd. v. Commissioner of Central Excise, 2005 (181) E.L.T. 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratios/per-centages disclosed in the said telex related to cost break-down figures received from SN based on "their contract values" with their suppliers i.e. ITP and others and that this percentage break-up would have no application whatsoever to the instant case. 23. The Commissioner failed to appreciate that this was not a back to back contract and all the materials which were received or receivable by SN in terms of contract it had entered into with its suppliers were not supplied under the subject contract with TISCO. This was ex facie apparent from the contract itself. For example, under item Nos. 2.3.12.1 and 2.4.10.4 of the contract (at pages 55 and 61 of Appellant's Paper Book-Volume I), it would be seen that approximately 2000 Metric Tonnes of refractories which SN had received from its suppliers under the contracts it had entered into with them would be kept by SN and was not supplied to TISCO. Similarly, it would be seen from the initial offer letter dated 4th April, 1986 of EH that under its respective contracts SN had not received delivery of substantial tonnage of 2.518 tonnes of materials (at pages 288 and 289 of Appellant's Paper Book-Volume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant's Paper Book-Volume I, at p 254), would also show that as against the total equipment under the SN project of 23676 tonnes, items which were for sale by SN to TISCO was 14045 tonnes of equipments and materials, a shortfall of about 9600 Metric Tonnes approximately (at p. 254 of Paper Book). However, conveniently this has been ignored by the Commissioner in the said order on some patently absurd reasoning. 27. In this connection reference may also be made to the answer given by Shri N.R. Sudheer of EHI (whose statements had been relied upon in the said order by Commissioner) in response to the summons under Section 108 of the said Act. Question Nos. 21 and 22 of his statement dated 13-10-1991 (Pages 222 to 244 of Appellant's Paper Book-Volume I, at p227) and answer thereto are as follows :- "Q. No. 21 : Specifically talking about the B.F. and 3 TLC which details did you carry with you to TISCO? A The details carried by us to TISCO with offer was as follows:- (a) the brief technical description of the B.F. and designing data. (b) Brief description of the Engineering details available in possession of SN which would be sold along with equ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th suppliers. This material evidence was also ignored by the Commissioner, although his attention was drawn thereto. 29. The Commissioner has relied upon his predecessor's findings allegedly based upon the statement of Shri Parthasarathi, Technical Director of M/s. M.N. Dastur & Company Limited, to allege and hold that blast furnace equipments were "substantially complete". The answers given by Shri Parthasarathi as recorded in his statement dated 12th October, 1991 (Annexure 5 of SCN at pp. 174-195 of Appellant's Paper Book-Volume I), under Section 108 of the said Act, would ex facie demonstrate the incorrectness of this allegation/finding. They are as follows (emphasis added) :- Q.No. 8: What was the business there? Ans. I went there for seeing equipment as well as for discussion with SN Portugal Engineer to make assessment of balance equipment that would be required to be procured in India. I also wanted to collect some basic drawings with which we can start primary work for setting up the plant at Jamshedpur. For this purpose I collected some plant layout drawings and brought them with me. Q.No. 9: Mr. Chadha went there earlier just to see the equipm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciate and/or take into account. 31. The Commissioner failed to appreciate that there was or could be no substantial deterioration thereof. Moreover, as would appear from the aforequoted Answer to Question No. 22 by Shri N.R. Sudheer of EHI relied upon by the Commissioner, the engineerings and drawings were "for the whole plant" that is "over and above the equipment which was in possession with SN to enable any buyer to complete the plant by processing the rest of the items" than those sold under the subject contract by SN to the appellant. The contrary contention of the Commissioner, as contained in the said order, is erroneous. There is no support in the documents on record or even in the said order of the erroneous contention that the technical documents and the equipments, shorn of each other had no practical utility. The answers to Questions 39, 40 and 41 of Shri Parthasarathi as contained in his statement dated 12th October, 1992, (Annexure 5 of SCN at page 182 of Appellant's Paper Book-Volume I), on a plain reading thereof set out hereunder, would show that the support thereon by the Commissioner, is misplaced and do not support the purported conclusion a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... normally low price, the price of the engineering as a component of the total price also should have come down proportionately. How do you justify lowering of the price of equipment without corresponding MOU in the price of the engineering? Ans. According to me, the technical documentation has more lasting value than the equipment. Therefore, the reduction in the engineering has not been much compare to the equipment. Q. No. 57. It is believed to be established fact that technology becomes obsolete faster than the equipment themselves. In instant case it is evident by the fact that the automation software has already become unusable and is required to be replaced. In this background how can you say that there should have been know lowering of the price in the engineering? Ans. In B.F. technology the technical development do take place and incorporated their in the existing furnace during relining. Similarly the basic documentation could be used with the changes to certain areas where such technological developments have taken place. Therefore, the reduction in value of engineering for technical obsolence will be at a very low rate. 33. The ratio as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeded on an ex facie erroneous basis that the "same goods" covered by the SN - ITP contract were sold to the appellant by SN under the subject contracts. As would be apparent from what is stated hereinabove, this is contrary to the records. Some of the "same goods" were not sold or were not available to be sold by SN to TISCO. This fundamental error of fact makes the purported finding of the Commissioner erroneous on the fact of it and thus untenable. The Commissioner had therefore erred in holding that the price break-up contained in the said telex of February, 1988 did or could represent the correct break-up of the prices in the instant case. 35. The purported finding of the Commissioner that the contention of the appellant that the equipments were incomplete was allegedly not established and that on the contrary from the statements recorded and the evidence on record it was found that the Blast Furnace equipments were substantially completed is wholly incorrect and contrary to the records. For example, at page 41 of the order dated 3-4-1996 referring to the document, being Minutes of the Meeting dated 19/20 Sept., 1989 [Annexure 18 (c) of SCN, at pp. 245 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant had to procure from elsewhere or manufacture by itself. Rejection of this relevant and material fact on incomprehensible and absurd reasoning as contained in the said order, clearly demonstrates the closed and predetermined mind with which the said order has been passed, ignoring relevant and material facts on record. 37. The Commissioner should have appreciated and erred in not doing so that even apart from the equipments supplied by SN being unused as against new and without performance guarantee, taking into account the shortfall in the equipments to be supplied by SN as against the equipments received or receivable under the SN Project, whereas there would be no reduction in the engineerings and drawings supplied, the ratio of 81% of the equipments would come down to approximately 46% as per the following calculation:- If 100% equipments make 81% of total cost The ratio of engineerings and drawings would accordingly increase to approximately 54% of the total cost. Thus the ratio of 52:48 (13.5 MDM : 12.5 MDM) approximately between equipments and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te herein that although Mr. Sudheer, representative of EHI, whose inter se telex with EH (the agents of the foreign seller) has been relied upon, was summoned and statement of his recorded and relied upon, no question was put to him on the break up between MD-302 and MD-301. No particulars were also sought for from SN, the supplier of the goods and technical documents regarding the manner in which the break-up between MD-302 and 301 was arrived at, although the relied upon document at page 340 of Department's Paper Book - Volume II being a telex dated 23rd Dec., 1988 of SN to EH/TISCO, clearly evidences (para 1 of the said telex) that the break-up between the equipments and technical documents were made with the due approval and involvement of SN. 42. The purported finding in the said order that TISCO had found the areawise price break-up for the equipments on the basis of SN-ITP contract acceptable and had submitted to the Govt. of India on this basis is totally wrong. Neither Annexure 14(1) (ii) nor Annexure 14(o) of the show cause notice (at pages 441-444 and 429 respectively of Appellant's Paper Book - Volume II) supports this incorrect finding. It would be s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said order, however, completely overlooks this relevant and material factor. In this regards reliance is placed upon the decision of this Hon'ble Tribunal in the case of A.N. Gupta & Co. v. Collector of Customs - 1994 (69) E.L.T. 58 (T). 45. As acknowledged by the Commissioner as well as his predecessor in their respective orders and as would be evident from, inter alia, the agreements in question, this was a "distress sale" by SN. This also definitely was a reason which resulted in reducing the cost of equipments. However, this relevant material has also not been considered. 46. It is submitted that in paragraph 17 of its judgment (at p 250 thereof), the Supreme Court has also observed as follows : - "Sub-rules (3) and (4) of Rule 9 clearly provide that additions to the price actually paid or payable is permissible under the Rules if based on objective and quantifiable data and no addition except as provided by Rule 9 is permissible." 47. In the present case it would be seen from the said order that no "quantifiable date" on "objective" basis is contained therein. Hence, the purported additions made, on this ground also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as observed vide para 10.2 of its order that entering into two contracts (MD 301 and MD 302) was a legal necessity". The aforesaid clearly sets at rest the genuineness and the bona fide of the two contracts and as regards the requirement therefore. 49.2 Further, from the relevant documents on record, it would also be seen that each of these two contracts, MD 301 and MD 302 were approved by the concerned authorities of the Government of India, being the Ministry of Steel and the Ministry of Industries, Secretariat for Industrial Approvals, Department of Industrial Development. The relevant documents evidencing the aforesaid are at pages 268-270 (Appellant's Paper Book-Volume I) pages 251 to 254 (Appellant's Paper Book-Volume I) and at pages 373-376 (Department's Paper Book-Volume-II). It would be seen therefrom that such approvals were granted upon due scrutiny and upon being satisfied by the answers of the appellant to the queries raised. 50. There being thus no misdeclaration in the value of the said goods, the question of confiscation thereof in terms of Section 111(m) of the said Act could not and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of Customs, 2000 (126) E.L.T. 808 (T) para 34 This decision was affirmed by the Supreme Court - 2001(130) E.L.T. A266 (SC) (b) Associate Marketing Services v. Commissioner of Customs (Airport), Chennai, 2006 (195) E.L.T. 287 (T) Para 2 52.3 Further and in any event, it is also settled law that on readjudication upon remand, the favourable directions obtained by the appellant from the Adjudicating Authority in the original proceedings cannot be disturbed nor can there be enhancement of penalty or find in such remand proceedings. In this respect reliance is placed upon the following decisions :- (a) Commissioner of Customs v. Hitachi Chemicals, 1999 (113) E.L.T. 847 (T) Paragraph 3 - relying upon the decision of Supreme Court in Banshidhar Lakshmi Prasad v. Union of India, 1978 (2) E.L.T. J 385 (SC). (b) HCL Infosystems Ltd. v. Commissioner of Central Excise, 2005 (192) E.L.T. 740 (T) Paragraph 10 (c) HCL Ltd. v. Collector of Customs (Supra) paragraphs 17 and 18. 52.4 It is submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to evading appropriate amount of customs duty. 3.3 However, before going into the allegation of under-valuation, a few relevant facts need to be seen for proper appreciation and judicious consideration: (i) Sometime in 1981, M/s. Italimpianti, Italy (ITP, for short) had supplied to SN equipments for blast furnace, LD converter, continuous billet casting machines, wire rod mill, torpedo ladle cars, etc. together with related Engineering and technical documents for expansion of steel plant in Portugal. However, before the equipments could be installed, Portugal decided to join European Economic Community. Consequently, Portugal could not have expanded its steel making capacity. M/s. SN had, therefore, to cancel its investment plan and sell the equipments and materials lying unused from 1981 to 1986. For this purpose, SN had appointed M/s. Elof Hansson, Sweden (EH, for short) as its Agent. EH had its Subsidiary in India called M/s. Elof Hansson (India) Ltd. (EHI, for short). (ii) Vide its letter dtd. 13-8-86, EHI had offered to the appellant a number of equipments and materials that SN had received from I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DM 13.5 millions FOB Lisbon relating to the Equipments; - DM 12.5 millions relating to the Technical Documentation. (vi) Pursuant to the aforesaid sale contract, technical documents covered by MD 301 arrived at Calcutta and was cleared at 'nil' rate of duty under sub-heading No. 4906.00 of the Customs Tariff vide Bills of Entry dtd. 13-3-90 and 11-4-90. However, the appellant sought for registration of its contract MD 302 under Project Imports Regulations, 1986 with the Custom House, Paradeep which was duly allowed enabling it to avail the benefit of concessional rate of duty for project imports. Against this contract MD 302, the first consignment of part of the equipment arrived at the Paradeep Port and was assessed provisionally and allowed clearance on payment of duty on the declared value of DM 60,75,000 (F.O.B.) under Bill of Entry dtd. 6-4-90. The second consignment under this contract also arrived at Paradeep Port and the Bill of Entry dtd. 7-9-90 was filed declaring the F.O.B. value as DM 6,75,739. (vii) In the meantime, the Deptt. gathered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the equipments would be the entire contract price of DM 26 millions. However, as the Commissioner had determined the value of the equipments at DM 21-2747826086 millions and the Deptt. did not file any appeal against the same, the duty liability of the appellant would be determined pegging the value of the equipment as determined by the adjudicating authority. The Tribunal also reduced the penalty to Rs. 4 crores from Rs. 5 Crores imposed on the appellant, TISCO. The appeals of Dr. J.J. Irani, Shri S.L. Srivastava and M/s. M.N. Dastur & Co. were allowed by the Tribunal by setting aside the penalties imposed on them vide its order dtd. 20-8-97 reported in 1999 (109) E.L.T. 263 (T). (xi) Aggrieved by the Tribunal's order, the appellant TISCO filed an appeal in the Hon'ble Supreme Court. Vide its order dtd. 16-2-2000, the Hon'ble Supreme Court disposed of the said appeal by way of remand to the Tribunal with the directions contained in para 18 of its order reported in 2000 (116) E.L.T. 422 (S.C.). As per the said directions, the Tribunal was required to find out whether there has been under-valuation of the Blast Furnace Equipments by transferring a part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the offer letter, was DM 29.9 millions (i.e. DM 28 millions plus DM 1.9 millions). This price was negotiated personally by Dr. J.J. Irani, the then Managing Director of TISCO with the Chairman of SN at the former's office at Jamshedpur and finally it was settled at DM 26 millions as may be seen from his statement dtd. 10-11-92 (in answer to question No. 1 at page 196 of the PB Vol.-I filed by the appellant). 3.5 From the above, it would be quite evident that both the offered price and the negotiated price was a composite one without any break-up between the equipment and the drawings and engineering. However, from the documentary evidences on record which have not been disputed at any stage, it would appear that right from the beginning the appellant was insisting upon break-up of the total price between the equipment and the engineering. This is evident from the report of Shri N.R. Sudheer, Marketing Manager of EHI sent to EH, Sweden under the title "Report of Call" (at page 240/241 of the PB, Part-II filed by the Department). This report was made by him after visiting Jamshedpur and holding discussions with the various officials of TISCO during the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TP. This is quite evident from the Agreement MD-301 which clearly states that the seller and the buyer have agreed upon the present Agreement for supply of Technical Documentation for one 1578.5 cum Blast Furnace and three 200 Ton Torpedo Ladles which is listed under Annexure-I (List of Drawings, Manuals and Technical Specifications). From this Agreement itself, it is established beyond any doubt that only the related technical documents were supplied to the appellant. TISCO had indicated that it was interested in one BF and 3 TLCs only. Therefore, in order to evaluate their cost, it had asked for break-up of prices under Equipment, Refractory and Engineering. The break-up given for this purpose was evidently only for the equipments sought (one BF and 3 TLCs) and not for the SN-ITP contract though it was based on the same. This is also evident from the Telex dtd. 8-2-88 itself. 3.10 From the documentary evidences relied upon in the proceeding, it is quite apparent that the intention of the appellant right from the beginning was to have two sub-contracts, namely, MD-301 and MD-302 so that part of the value of the equipme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be only one contract. However and if necessary, we can consider the separation in different chapters of the matters related to equipment and technical documentation". SN could not have agreed to two separate contracts as there could not be one contract for 'equipments' and the other for 'technical documents' which included documents such as, operation manuals, maintenance manuals which are supplied along with the equipments during the course of normal trade. Without such documents, the equipments were not saleable and as such there could not have been separate contracts for sale of equipments and such technical documents. 3.14 As a result of constant persuasion, finally on 11-10-89, the sale contract was made by the parties and under this contract, two sub-contracts of the same date - one for the technical documentation (MD 301) and the other for the equipment (MD 302) were also made. From the wordings of the two sub-contracts, it would appear that they had been made in such a way that they looked independent and linkage between them became difficult. This was precisely the reason that when the investigation star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this connection, EHI's offer letter dtd. 13-8-86 may once again be referred to. From this letter, it may be seen that amongst various other items, one blast furnace equipment exclusive of blowers was also offered for sale. It would, therefore, appear that except for the blowers, the blast furnace equipment was complete. The fact that the blast furnace equipment was substantially complete is quite evident from the statements of Dr. J.J. Irani, M.D. of TISCO and Shri C.R. Parthasarathi, Technical Director of M/s. M.N. Dastur & Co. and Shri N.R. Sudheer, Marketing Manager of EHI. 3.19 In his statement dtd. 10-11-92 (page 196 of the Paper Book Vol. I), Dr. J.J. Irani had stated in answer to question No. 9 that they could build complete blast furnace from amongst the equipment which was lying in store in Portugal. For the sake of convenience and proper appreciation, question No. 9 together with his answer is reproduced below: Q. 9 : It was known that Portugal had not completed their deal with the original supplier of Blast furnace equipment i.e. IP. Was not there a doubt that the Blast furnace could be incomplete. A : I was not personally aware ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ially complete. 3.21 During the hearing, a grievance was made by the ld. Counsel that the appellant had submitted written notes of arguments under cover of its letter dtd. 22-9-01 for consideration by the Commissioner. However, the Commissioner has considered only a few of them and not all. Perusal of the impugned order particularly from paras 16 to 23 would clearly show that all the relevant submissions made by the appellant have been duly considered by the Commissioner. Hence the grievance is not genuine and is unacceptable. 3.22 At the conclusion of his submissions, the ld. Counsel for the appellant pointed out that in the earlier adjudication order dtd. 3-4-96, no redemption fine was imposed. However, in the present impugned order, the Commissioner has imposed a fine of Rs. 6.5 crores which cannot be sustained. In his submission, in the remand proceeding, the Commissioner ought not to have imposed any fine at all. The ld. Counsel ignores the fact that the Hon'ble Supreme Court, vide para 20 of its judgment, has observed that if the Tribunal may find the equipments forming the subject matter of contract DM-302 to be under-valued, the legal consequences flowing from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d equipments is correct or part of its value is shown as value of the engineering documents and drawings. The Hon'ble Supreme Court has also held that the plea of the Revenue regarding under-valuation of the impugned equipments should be examined on the basis of material already available in the record. As such, there is no scope for either considering any additional material or directing the adjudicating authority to obtain any fresh evidence. The task of the Tribunal, therefore, in this 2nd round of litigation lies within a very narrow compass. 5. We find that the department's case regarding under-valuation of the equipments is based on its conclusion that the appellants were themselves interested in the purchase of the equipments from M/s. SN, that it was not so much of a distress sale as claimed by the appellants and it is the appellants, who got the break-up of prices for engineering and hardware, which M/s. SN was initially reluctant to agree to. It is the department's case that the appellants negotiated for purchase of the entire Blast Furnace earlier purchased by M/s. SN from Italy and that the negotiated contract price was for the entire Blast Furnace and the break-u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stances, the department has concluded that the appellants have purchased substantially the same equipments with necessary documentation which was initially sold by the Italian manufacturer to SN and subsequently resold to the appellants and that the total amount has been divided under two sub-contracts showing a lower value for the equipments which has been suppressed by transferring part of the value towards Foreign Collaboration Agreement and the technical documents. 8. After going through the case records, we note that no investigation has been carried out by the department to obtain any evidence from M/s. SN or from the Italian suppliers so as to verify whether the actual price paid for the equipments was more than what has been declared. The Italian manufacturers as well as M/s. SN, being located outside India, investigation at the suppliers end definitely poses difficulty but such an investigation with the help of Customs/Tax authorities abroad using diplomatic channel and making use of instruments of the World Customs Organization would have clinched the issue. This does not seem to have been done and in view of the specific direction of the Hon'ble Supreme Court, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion DM for the Blast Furnace and 1.9 Million DM for the 3 Torpedo Ladle Cars as per the offer made by SN to the appellants for working out the value of engineering. Applying the percentages indicated in the Telex to the initial offer from SN, the engineering cost for the Blast Furnace comes to 5.32 Million DM (28 MDM x 19%) and the cost for the engineering for Torpedo Ladle Cars comes to 0.114 Million DM (1.9 MDM x 6%), both totalling 5.434 Million DM. We note that in place of the earlier offer of 28 + 1.9 = 29.9 Million DM, the equipments and the engineering have been sold at 26 Million DM. Attributing the reduction in the price entirely to the non-supply of the part of the equipments, and presuming that the price for the engineering was not reduced (which goes to the advantage of the appellants), we arrive at a price of 26 - 5.434 = 20.566 Million DM as the value for the equipments. 13. Our calculation as above is not dependent on how much of the equipments including refractory were not supplied. It relies on the clause of the contract itself regarding description of the engineering/technical documentation and the price break-up between engineering and equipments as given i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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