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Bramhani Industries Ltd. Versus Commissioner of Customs (Airport & Air Cargo) Chennai

2017 (11) TMI 170 - CESTAT CHENNAI

Valuation - enhancement of declared values - Whether the import of impugned goods is a pre-condition / intrinsic part of the total importation of the main plant and machinery or whether the goods can be considered as having been imported for subsequent post-import activity? - Held that: - from the copy of the agreement available before us, it emerges that the agreement involves purchase of complete design, equipments, systems, technical services and training for Coke Oven plant and by-product pl .....

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ring Design and Technical Documentation" imported can be classified under Chapter 49 of CTH as claimed by the appellant or whether they are required to be classified along with the main plant and machinery and equipments imported for the project? - Held that: - We have then no doubt in our mind that the import of the Engineering Design and Technical Documentation are not for any post-import activity but are indispensible condition to the import of the main plant and equipment/machinery - once it .....

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tion 111 (m) of the Act which ordains that any goods which do not correspond to in respect of value or in any other particular with the entry made under the Act shall be liable for confiscation. When imported goods have been evidently found as not corresponding in respect of value, hence their confiscation under Section 111 (m) is ordinarily very permissible. There is also no bar for imposition of redemption fine under Section 125 if there is no duty liability has been determined - however, quan .....

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l No.C/271/2010 - Final Order No. 42561-42563 / 2017 - Dated:- 2-11-2017 - Ms. Sulekha Beevi C.S. Member ( Judicial ) And Shri Madhu Mohan Damodhar, Member ( Technical ) Shri B.G. Chidananda URS, Advocate For the Appellant Shri B. Balamurugan, AC (AR) For the Respondent ORDER Per Bench All these three appeals involving identical issue are filed by the same appellant, hence they are taken together for common disposal. 2. The dispute involved in all these appeals concerns enhancement of declared v .....

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t declared values and classification were incorrect. Accordingly, proceedings were initiated by way of SCN dt. 18.08.2009, inter alia proposing enhancement of value to EURO 54,72,000 (CIF) classification of the goods under CTH 84178090 along with main equipment (MTPA Coke Oven with CDQ and Byproduct Plant), confiscation of the imported goods and imposition of penalty under Section 112 (a) of the Customs Act, 1962. On adjudication, vide an impugned order dt. 29.10.2009, the Commissioner confirmed .....

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ere classified under CTH 49111090, claiming exemption under Notification No.21/2002-Cus. Sl.No.164. So also, vide Bill of Entry No.617835 dt. 23.05.08, they had imported the goods declared as "Design Engineering and Technical Documentation for 178M3 Blast Furnace". The value of the said consignments were declared as US$ 600 and US$ 1120 respectively and the goods were classified under 49119990, claiming exemption under CN 21/2002. SCN dt. 31.07.2009 was issued to appellant inter alia p .....

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lty under Section 114A ibid. In adjudication, vide impugned order dt. 27.07.2010, the Commissioner confirmed the proposals in the SCN for enhancing the values and classifying the goods under 84198190 and CTH 84178090. Differential duty was also confirmed. Imported goods were confiscated however allowed to be redeemed on payment of fine under Section 125 ibid of ₹ 1,50,00,000/-. Penalty equal to duty liability namely, ₹ 3,13,52,416/- under Section 114A was also imposed. Hence Appeal C .....

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irway Bill No.992 3540 270 declaring the value as US$50. A SCN dt. 30.07.2009 was issued to appellant proposing enhancement in value to US$ 6,00,000 (CIF) classifying under CTH 84198190 in line with the main equipment (Sinter Plant). The SCN also proposed enhancement of Detailed Engineering Drawings for Blast Furnace imported under DHL Airway Bill No.9923540270, the value therein was proposed to be determined at US$ 224000(CIF) and classification under CTH 84198190 and CTH 84178090 under which t .....

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the matter came up for hearing, on behalf of the appellant, Ld. Advocate Shri B.G. Chidananda URS submitted oral and written submissions which can be broadly summarized as under : (i) The department has proceeded on a premise that import of Technical and Engineering Documents is a precondition for the same equipment Sinter Plant and Blast Furnace etc. imported separately from the foreign supplier. (ii) Department has taken a view that supply of Design Engineering Drawings and Technical Document .....

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uot;. Ld. Advocate s contention is that Engineering and Technical documents are meant only for installation of plant and machinery as is evident from para 3.8 of the contract. He draws our attention to the agreement in para 3.8 wherein the seller has agreed to deliver the detailed certified construction drawings for civil foundation works. (v) Ld. Advocate further draws our attention to page 5 of the contract wherein it has been clearly indicated that purchaser has appointed MECON Limited as the .....

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odical Design Liaison Meeting has to be held for finalizing the technical specifications and therefore at the time of contract the technical specifications were not made part of the contract though mentioned. (vii) In respect of Appeal C/554/2009, the impugned order dt. 29.10.2009 only redetermined the declared value of the imported goods. However, there is no differential duty that has been demanded. In the circumstances, the confiscation of the goods as well as imposition of the redemption fin .....

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e has been redetermined and enhanced, however, there is no demand of differential duty. Hence confiscation of the goods under Section 111 (m) of the Act and imposition of redemption fine under Section 125 cannot be justified. There is also no justification for imposition of high quantum of penalty of ₹ 50 lakhs under Section 112 (a) of the Act. (x) Ld. Advocate also further submits that various higher courts have held that when the engineering, design and drawing documentations are related .....

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. Gujarat Mineral Development Corpn. Ltd. v CCE Ahmedabad - 2005 (190) ELT 5 (SC) 3. CC New Delhi Vs Parasrampuria Synthetics Ltd. 2001 (133) ELT 9 (SC) 4. CC (Port), Kolkata Vs J.K. Corporation Ltd. 2007 (208) ELT 485 (SC) 5. CC Vs Ferodo India Pvt. Ltd. 2008 (224) ELT 23 (SC) 6. CC (General) New Delhi Vs Gujarat Perstorp Electronics Ltd. - 2005 (186) ELT 532 (SC) 7. CC Mumbai Vs Kinetic Technology India Ltd. 2016 (314) ELT 155 (Tri.-Mumbai) 7. On the other hand, ld. AR Shri B. Balamurugan supp .....

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Annum recovery type coke oven plant with CDQ and with by-products plants for its project. Ld. A.R draws our attention to the fact that there is no mention of any installation in the said agreement. 7.2 So also in para 3.3 of the agreement, it is clearly indicated that the seller's scope shall include inter alia supply of technology and basic engineering; complete design and detailed engineering; supply of plant and machinery etc. 7.3 In para 3.8 of the agreement, it is laid down that total .....

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every one month with details of drawings, designs and data for review. 7.5 The imported design and technical documents therefore are not post-importation activity but they are very much related to the plant equipments earlier imported. 7.6 On the matter of value enhancement, Ld. A.R submits that in all the three appeals, it has been meticulously established that the prices declared by the appellant in the Bills of Entry were concocted and that in addition to the declared prices, had made 10% / 4 .....

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rd both sides and have gone through the facts. In all these three appeals, the core issues that come up for appellate decision are as under : (i) Whether the import of impugned goods is a pre-condition / intrinsic part of the total importation of the main plant and machinery or whether the goods can be considered as having been imported for subsequent post-import activity. (ii) Whether "Engineering Design and Technical Documentation" imported can be classified under Chapter 49 of CTH a .....

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at page 4 of the agreement attests to this : "A. The Purchase has decided to purchase complete Design, Equipments, Systems, Technical Services & Training for its 1 Million Ton Per Annum recovery type coke oven plant with CDQ and with by-poroducts plants for its Project which will be located at Bramhani Hills, Jammalamadug, Kadapa District, Andhra Pradesh, India in accordance with the terms & conditions of this Contract. B. The Seller has agreed to sell complete Design, Equipments, S .....

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ttery & BPP and EURO 7,600,000 for CDQ. It is also laid down that such design engineering and technical documentation has a reference to the "technical specification". It is seen that Annexure-3 contains Technical Proposals for Battery and CDQ. In Article 1.0 the "Battery Limits" has been defined as "areas and boundaries of Design, Engineering, Supply and Technical services to be supplied by the seller". Here again, we find that Design and Engineering is an inna .....

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import of plant and equipment and the import of "Design Engineering and Technical Documentation". Thus there could be no import of the equipment and the machinery without the documents also being imported and payment terms of which have been separately brought in para 5.1 of the agreement. 9.4 We have then no doubt in our mind that the import of the Engineering Design and Technical Documentation are not for any post-import activity but are indispensible condition to the import of the m .....

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(SC), also cited by ld. Advocate, will not help their case since the Hon'ble Apex Court has categorically held therein that technical know how cost and payment of royalty is includible in price of imported goods if such payment constitutes a condition pre-requisite for supply of imported gods by foreign supplier, which ostensibly is the case herein. 9.7 The reliance of the Ld. Advocate on the ratio of the Hon'ble Supreme Court's judgment in Tata Iron & Steel Co. Ltd. Vs CCE Bhuba .....

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t evidence has been unearthed by the department to establish that declared / invoice values were much lower than the actual price adopted by the appellant to the foreign supplier. In all these cases, it has also been established that the appellant was required to, even before import of the impugned goods, effect payment of certain percentage of the actual value of the goods. Similarly, a percentage of the actual value was required to be paid after the import was effected. In any case, in all the .....

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e appellant's prayer on this count will also fail. 9.10 Coming to classification of impugned goods, once it has been established that the value of the Engineering, Design and Technical documents are required to be added to the assessable value of the related plant and machinery/equipment earlier imported, then each of such import will merit classification under Customs Tariff as that of the main import and we therefore are not able to find any infirmity in the change of classification ordere .....

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under the Act shall be liable for confiscation. When imported goods have been evidently found as not corresponding in respect of value, hence their confiscation under Section 111 (m) is ordinarily very permissible. There is also no bar for imposition of redemption fine under Section 125 if there is no duty liability has been determined. Section 125 ibid provides for giving the owner of the goods an option to pay in lieu of confiscation such fine as the adjudicating officer thinks fit. The only p .....

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