TMI Blog2006 (11) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... and Consultancy for PBCC Plant. The contract with OIPL covers post importation activities. The appellants imported the goods on 1-7-1989 under two Bills of Entry. The clearance has been allowed on payment of duty. Their impugned goods were assessed as component and parts. On the direction of the Collector (Appeals), the authorities registered the import under Project Contract Scheme on 31-1-1991. A show cause notice dated 12-8-1991 was issued proposing inclusion of charges paid for technical know-how, design and engineering to arrive at the assessable value. A corrigendum was issued later for quantification of the payment. The Adjudicating authority in his letter dated 30-9-1999 confirmed a demand of Rs. 1,66,28,462/-. In the said order, an amount paid to foreign supplier towards Royalty/Technical know-how, design and engineering, supply of equipments and plants were included. However the amount paid to M/s. Nipon Otto KK (NOK), collected towards design, engineering, documentation, civil, structural, manufacture, fabrication and supply of indigenous equipment, etc., was not included. The Original authority held that they are in the nature of post importation charges and payable in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y shall be made when the importer has filed a Bill of Entry under Section 47. Under Section 47, the goods can be allowed to be cleared only after the proper officer is satisfied that the goods are not prohibited goods and that the duty has been paid. Once it is accepted that the goods have been cleared under Section 47, it follows that the goods were finally assessed. There is no reference to Section 18 at all. As a matter of fact, notice has been issued under Section 28 of the Customs Act. The demand for short levy can be made only under the provisions of Section 28. The question of short levy will arise only when the goods have been cleared after final assessment not after provisional assessment on the basis of provisional assessment which will fall under Section 18 of the Act. It is an admitted fact that a show cause notice has been issued only under Section 28. The show cause notice does not mention that the goods were provisionally assessed. Any wrong understanding by the importer regarding the nature of the assessment cannot make it a provisional assessment or final assessment. The legal position has to be gone into. In this case, no notice was issued within six months from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplained that there are three contracts and all the three contracts did not relate to the imported goods. The contract dated 12-2-1988 was with reference to activities to be carried out in India and therefore it will not attract Customs duty. The Department had itself accepted this fact. (v)The Royalty was paid only for post importation support which is accepted by the Commissioner (Appeals) herself. Therefore no duty could be leviable on the Royalty paid under the contract dated 31-3-1988. (vi)The learned Advocate relied on the following case laws :- (i) Commissioner of Customs, New Delhi v. Prodelin India (P) Ltd. [2006 (202) E.L.T. 13 (S.C.)] wherein it has been held that technical know-how fee charged in respect of post importation activities is not includible in the assessable value of the imported goods. (ii) SAIL, Durgapur Steel Plant v. Commissioner of Customs, Kolkata [2006 (202) E.L.T. 374 (Tri. - Kolkata)] wherein it has been held that the cost of drawings and technical documents required for procurement or manufacture of goods in India by importer or which relates to post importation activities for assembly, construction, erection, operation and maintena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d M/s. Nihon Otto KK. We reproduce the Para 2 which deals with scope of the contract :- "2.Scope of Contract. NOK shall design, manufacture and deliver the equipments and spares of the Partial Briquetting of Coal Charge Plant under the terms and conditions of the present contract in accordance with the Technical Specifications as per Annexure - I to the present contract. The said equipments and spares shall hereinafter be referred to as the 'Equipment'." Para 3.2 deals with the payment terms. The total contract price as indicated is Rs. 84,04,00,000/- only. 7.There is another contract entered between the appellants and the foreign company. This contract is dated 31-3-1988. This contract covers in its scope Royalty/design, engineering and consultancy for the PBCC Plant. In Para 4.2, there is reference to Royalty/design, engineering and consultancy. The payment of Royalty under this agreement is for technical know-how, design, engineering and consultancy services which are defined as hereunder: "Royalty/Design, Engineering Consultancy include the preparation of process and installation design, drawings, data and documentation including flow diagram. P I diagram, gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law. Moreover, there is nothing on record to show that the assessment provisional. In these circumstances, the demand of duty on account of inclusion of income-tax paid is not sustainable and the demand to that extent is not liable to pay by the appellants. After going through the scope of the three contracts, we find that the contract dated 7-3-1988 only covers the price for the imported equipments. The Royalty contract is only for the activities carried out after the goods have been imported. This issue is clearly covered by the decision of the Hon'ble Supreme Court in the case of Commissioner of Customs, New Delhi v. Prodelin India (P) Ltd. [2006 (202) E.L.T. 13 (S.C.)] wherein it has been held that the technical know-how fee charged in respect of post importation activities is not includible in the assessable value of imported goods. From the scope of the contract for payment of Royalty charges, we do not find that the payment of Royalty is a condition of sale of the imported goods. Therefore, Rule 9(1)(c) of the Customs Valuation Rules will not be applicable. Hence the demand of duty on account of the inclusion of Royalty charges will not be sustainable. Summing up, we hold ..... X X X X Extracts X X X X X X X X Extracts X X X X
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