TMI Blog2015 (12) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... ESTAT Chennai), we hold that technical knowhow of US$ 1,30,000 is not addable to the value of imported goods. We set aside the demand on merits. Correspondingly, the imposition of redemption fine and penalty is also set aside. - Decided in favour of assessee. - Appeal No. C/227/2001 - FINAL ORDER No.41722/2015 - Dated:- 15-12-2015 - Shri R. Periasami, Technical Member And Shri P.K. Choudhary, Judicial Member For the Petitioner : Shri P.R. Renganath, Advocate For the Respondent : Shri Kailash Chandra Jena, ADC (AR) ORDER Per R. Periasami Pursuant to Hon ble High Court s order, dt. 7.11.2014 , the present appeal is taken up for de novo hearing. 2. The brief facts of the case are that appellant M/s.Continental Coffee Ltd. (CCL, for short) imported capital goods under EPCG licence No.1232940 dt. 16.5.94 and cleared the goods under 17 Bills of Entry partly through Chennai Port and partly through Mumbai Port. The goods were imported from M/s.Brazilian Food Projects, Brazil (BFP, for short). It appeared that appellant entered into agreement dt. 6.3.94 with BFP for supply of technical know how, design and drawings as a consideration an amount US$ 2,88, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice or in the Order-in-Original of the Commissioner. The Tribunal states that learned Department representative does not aver that the goods were finally assessed. This cannot be correct as the show cause notice issued under Section 28 (1) of the Act invoking extended period goes on the premise that assessment is final and the importer does not deny it to plead a case of no suppression or misstatement. We, therefore, find that the Tribunal has misdirected itself to consider the issue on a total new plea, which was not canvassed by the Revenue in the show cause notice. That apart, the Commissioner was not called upon to adjudicate on that issue as to whether the assessment is provisional or otherwise. We find that the Tribunal erred in considering such new plea and coming to the conclusion that there was no case of misstatement or suppression. The order of the Tribunal, in the light of the law laid down in the decisions of the Supreme Court, referred supra, requires to be rectified. In such view of the matter, the substantial questions of law raised are answered in favour of the assessee. For the foregoing reasons, this appeal is allowed by way of remand, the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable in their case. Drawings and Design, technical know how are clearly related to setting up of plant for manufacture of Spray Dried Instant Coffee in India for which technical knowhow fee was paid to the supplier. He also submits that out of the total plant and machinery used in the setting up of plant only 22% of components were imported from the supplier. He submits as per SCN the entire allegation is made only on the ground that parties are related and the technical knowhow should be included. He also submits the technical knowhow fees relates to post-importation activity. He relied the following case law :- (1) CC Mumbai Vs Hindalco Industries Ltd. 2015 (320) ELT 42 (SC) (Relied para-5) 3.2 On the limitation, he drew our attention to para-39 of the OIO where the adjudicating authority has invoked longer period only on the ground of non-declaration and concluded it amounts to wilful misstatement and invoked extended period. He submits that there is no wilful suppression with intent to evade payment of duty as the goods are imported under EPCG licence for fulfilment of export obligation and they have duly completed the export obligation and the Bonds were cancell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant for manufacture of Spray Dried Instant Coffee . The said machineries were imported and cleared partly at Chennai and partly at Mumbai and the entire import is covered under EPCG licence and appellants also fulfilled the export obligation under the said EPCG Licence which is not under dispute. The demand of differential duty of Customs was confirmed by invoking section 28 (1) covering the extended period. Appellant contended both on merits as well as on limitation. Appellant contended that the Technical Knowhow agreement dt. 6.3.94 entered with M/s.BFP is only for providing technical know how including design, manufacture and assembly, inspection, testing and use and adaption of plant and machinery of instant coffee technology and not in relation to the imported goods. In this regard, it is relevant to see various clauses of agreement dt. 6.3.94. The relevant clauses of the agreement are reproduced as under :- This Memorandum of Agreement made this 6th day of March 1994 between CONTINENTAL COFFEE LIMITED, a company incorporated and registered in India under the Companies Act, 1956, having its Registered Office at... Secunderabad-500 003 (hereinafter called 'CCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any deficiencies or imperfections discovered in such technical information supplied either b 'BFP' or through, BFP shall free of cost make good/eliminate and / or provide information/or new technical information to make good or rectify such deficiency or imperfection. 4.4 'BFP' shall use all endeavor to assist 'CCL' procuring the supply of such spares for achieving the operational capacity of 500kgs/hr of Instant Coffee production promptly and at preferred customer prices. 4.5 'BFP' hereby warrants that it is fully authorised and capable of offering technical know how it has contracted for herein and that it is not infringing any copyrights or patents in providing these services. 4.6 For purpose of this agreement, the Drawings, technical information, if any are understood to have been delivered outside India. .... ..... ..... CLAUSE-VI PFRORMANCE OF PLANT AND EQUIPMENT 6.1 'BFP' shall extend an irrevocable Bank Guarantee in terms acceptable to CCL to the extent of 5% of the contract value of US$ 2,88,000 at US$ 14,400 from a prime first class international bank acceptable to CCL for the assured qualitat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 itself. Adjudicating authority concluded that relationship does not affect the pricing of the goods. 8. It is also pertinent to see that is not the case of Department that appellants have imported the entire plant and machinery from the overseas supplier. As clearly admitted by the adjudicating authority in his order, only 22% of parts machineries were imported from the supplier and rest of the imports were made indigenously and through other imports. 9. In this regard, we rely Hon'ble Supreme Court's recent judgement in the case of CC Mumbai Vs Hindalco Industries Ltd. (supra) wherein the Hon'ble Supreme Court on identical issue of technical know how fees related to basic engineering, training and technical services, held that these cannot be loaded on the value of imported. The relevant paragraphs of the Hon'ble Supreme Court order are reproduced as under :- 5. On going through the order of the CESTAT, it becomes clear that the CESTAT has gone into the various provisions of the three agreements and has come to the conclusion that neither the fees paid under the Licence Agreement nor under the Basic Engineering, Training and Technical Services ..... X X X X Extracts X X X X X X X X Extracts X X X X
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