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TMI Blog2022 (9) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... hat were imported for the purpose of setting up Transmission Lines and Substations in the State of Maharashtra. 3. The two main respondents in this appeal are Maharashtra Eastern Grid Power Transmission Company Ltd. [MEGPTCL], which has been arrayed as respondent no. 1 and M/s. PMC Projects (India) Pvt. Ltd. [PMC], which has been arrayed as respondent no. 2. FACTS 4. The State of Maharashtra was facing acute power shortage with a deficit of approximately 17.5% and a peak deficit of 4700 MW. In order to overcome this deficit and to meet the future requirements, the Government of Maharashtra encouraged private sector participation in power generation, transmission and distribution. Number of private players came forward and began setting up Thermal Power Generation Plants in the State of Maharashtra. Adani Power Maharashtra Limited [APML] was in the process of setting up a coal based power project at Tiroda in the State of Maharashtra with a generation capacity of 3300 MW. Taking into consideration the huge transmission network requirement for evacuation of power from the power stations, and to implement the setting up of the power station, Maharashtra State Electricity Transmissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly, PMC, EIF and Gammon formed a consortium to bid for the transmission project and an agreement was entered between the three on 17.08.2010. 7. In the meantime, MEGPTCL was granted the Transmission License by order dated 14.09.2010 issued by MERC for the development of 765 KV Intra-State Transmission Network in the State of Maharashtra. 8. PMC along with its Consortium Partners emerged as the successful bidder for both the Transmission Line and the Substation project on 21.09.2010, based on the technical evaluation carried out by Price Waterhouse Coopers Pvt. Ltd. 9. Thereafter, MEGPTCL issued a Letter of Intent dated 23.09.2010 to the Consortium comprising PMC, EIF and Gammon India Ltd. for the Supply, Erection and Testing and Commissioning of Tiroda-Koradi-III-Akola II-Aurangabad Transmission Lines. A letter of Intent dated 23.09.2010 was also issued to the Consortium comprising PMC, EIF and Hyundai Heavy Industries for Design, Supply, Erection and Testing and Commissioning of the Substations, including Auto Transformers and Shunt Reactors associated with the Substations at Tiroda, Koradi, Akola and Aurangabad. 10. Two separate Purchase Orders, both dated 27.09.2010, were t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order to obtain the benefit of concessional rate of customs duty for the goods to be imported under the aforesaid Notification, MEGPTCL, based on the request made by PMC, submitted applications to the Principal Secretary, Energy Department, Maharashtra. In its applications, MEGPTCL, inter alia stated that PMC would be importing transformers with accessories and shunt reactors on behalf of MEGPTCL, as an EPC contractor, from EIF and would avail the exemption contemplated under the Notification. The details of some of the applications are as follows: Date Particulars 04.09.2011 Application by MEGPTCL to the Energy Department, Government of Maharashtra for issuance of Essentiality Certificate for Import of Transformers with accessories and Shunt reactors with accessories for Tiroda Substation for 2 nos. 765 KV Transmission Network from Tiroda, Koradi, Akola and Aurangabad. 24.09.2011 Application by MEGPTCL to the Energy Department, Government of Maharashtra for issuance of Essentiality Certificate for Import of Transformers with accessories and Shunt reactors with accessories for Akola Substation for 2 nos. 765 KV Transmission Network from Tiroda, Koradi, Akola and Aurangabad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to 31 consignments, where benefit under PIR was claimed, were assessed provisionally and subject to reconciliation under PIR. 17. It also needs to be noted that there were 4 Original Equipment Manufactures who had shipped the 57 consignments. The names of these four Original Equipment Manufactures, as mentioned in the show cause notice, are (i) Hyundai Heavy Industries Co. Ltd., South Korea (Hyundai), (ii) Dalian Insulator Group Co. Ltd., China (Dalian), (iii) Sediver Insulator (Shanghai) Co. Ltd., China (Sediver) and (iv) Suzhou Furukawa Power Optic Cable Co. Ltd., China (Suzhou). 18. The break-up of the shipments, as mentioned in the show cause notice, is as follows: Sr. No. Name of the OEM (shipper) Brief Description of goods No. of shipments (B/Es) Port of Import Clearance Type of clearance (Project Imp. 98.01 or merit) 1. Hyundai Auto Transformers, Shunt reactors & mandatory spares 31 Mundra (30) N. Sheva (1) Concessional rate under Heading 98.01 2. Dalian Disc Insulators 9 Mundra (8) N. Sheva (1) Merit Rate 3. Sediver Toughened Glass Disc Insulator 8 Mundra Merit Rate 4. Suzhou OPGW with 8 Fibre with fitting & access ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd iv) Penalty under section 114AA of the Customs Act should not be imposed on them. (II) EIF, Vinod Shantilal Adani, Jatin Shah, Mitesh Dani and Mehul Jani should show cause as to why penalty under section 112 (a) and (b) and section 114 AA of the Customs Act should not be imposed on each one of them in relation to the goods imported under the 55 Bills of Entry. (III) Jaydev Mishra, Associate General Manager, and Dharmesh Parekh, Senior Manager, both employees of PMC, should show cause as to why penalty under section 112 (a) and (b) and section 114AA of the Customs Act should not be imposed on each one of them in relation to goods imported under the 55 Bills of Entry. B Goods imported through Nhava Sheva Port (2 consignments) (I) PMC, the importer on record (as per Bills of Entry) and MEGPTCL (who are the owner of imported goods) should show cause as to why :- (i) The declared value in respect of the equipment and machinery imported under the 2 Bills of Entry having cumulative declared value of Rs. 19,82,42,342/- should not be rejected under the provisions of rule 12 of the Valuation Rules read with section 14 of the Customs Act and should not be re-determined cumulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s who were Original Equipment Manufactures, but for enabling inflation of invoices, it was made to appear on paper as if the goods were being supplied by EIF; (v) Accordingly, back-to-back contracts were signed between PMC (the contractor for MEGPTCL) and EIF on the one hand, and EIF and the 4 Original Equipment Manufactures on the other; (vi) Back-to-back contracts executed by EIF with the Original Equipment Manufactures were signed in India by Dharmesh Parekh (an employee of PMC). This clearly shows that the said supply contracts were planned, conceived and executed in India by the same set of persons. Thus, the entire transaction was a sham transaction; (vii) EIF proceeded to raise inflated invoices from time to time on PMC under the contract dated 01.10.2010 and the inflation was to the tune of about 400% of Original Equipment Manufactures value; (viii) For every procurement invoice raised on EIF by the respective Original Equipment Manufacture, EIF in turn arranged to raise and issue a back-to-back invoice on PMC, wherein it inflated the price and invoiced the goods at inflated prices; (ix) PMC handled, on behalf of MEGPTCL, the importation and clearance of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have followed the provisions of the section 138 C (4) of the Customs Act, but having failed to do so, the said documents received from unverified channels cannot be admissible as evidence; (iv) The Department committed a grave error in considering the assessment of Bills of Entry consignment wise in as much as the entire contract was registered with the Kandla Customs under PIR read with Heading 98.01 of the Tariff Act; (v) The bid cost of PMC led Consortium is at par with the cost of Transmission Line and Substation packages of 765KV project executed by a leading public sector company namely M/s Power Grid Corporation of India Limited [PGCIL] in the year 2009-10 i.e. during the same time for similar scope of work; (vi) The allegation that MEGPTCL and EIF, which is one of the Consortium members with PMC, are related to each other through Vinod Shantilal Shah is without any basis as MEGPTCL and the lead Consortium member namely PMC are not related to MEGPTCL. Even otherwise, merely because Vinod Shah happens to be the brother of the promoters and/or directors of AEL, it cannot be said that price has been influenced. The Company had invited bids based International Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoicing agent as PMC had entered into various contracts with various suppliers / contractors both in India and abroad for executing the contract awarded by MEGPTCL; (ix) PMC had a comprehensive role to pay in the execution of the contract awarded to the Consortium, which not only included procurement of equipments from EIF but also included the responsibility of entering into EPC contracts for procurement of equipments and services from local vendors; (x) The redetermination of valuation sought to be done is without any basis in as much as the price of identical goods in terms of rule 4 of Valuation Rules is not available with the Department; (xi) The show cause notice was issued on the basis of documents adduced by Directorate of Revenue Intelligence from foreign banks without following the due procedure of law as provided in the DTAA signed between UAE and India on 22.09.1993. The said documents are, therefore, not admissible as evidence; (xii) Section 138C(4) of the Customs Act lays down the requirement of producing a Certificate authenticating the source and other relevant particulars of the said documents received from outside India if the same is required to be tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactures would show that MEGPTCL was not the de-facto importer. The explanation offered by PMC that the Letters of Credit were opened as payment to PMC was delayed by MEGPTCL due to which the working capital of PMC was getting blocked leading to severe cash crunch and the supplier was insisting for payment at site, deserves to be accepted. Further, the opening of Letters of Credit by MEGPTCL was to ensure timely project completion; (v) Reliance was placed by the adjudicating authority on the order passed by Deputy Commissioner of Income Tax, for the Assessment year 2011-12 and 2012-13 wherein it was held that the parties namely, the buyer and seller were not Associate Enterprises and the prices were at arm's length. The said findings of the Income Tax Authority can be considered as supporting evidence to hold that the prices were at arm's length; (vi) It was not permissible to redetermine the value under rule 4 of the Valuation Rules as identical goods cannot mean the very goods which are being valued; (vii) The contention of the respondent for supporting the escalation of value by EIF to PMC, when compared to value between Original Equipment Manufacture and EIF due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hallenged the validity of invoices issued by EIF and so also the contract between EIF and PMC as the said findings run contrary to the allegations made in the show cause notice wherein it has been alleged that the transaction between EIF and PMC were sham transaction and EIF was only a front of Adani Group, which acted merely as an intermediary invoicing agent for inflation of the value; (iv) The adjudicating authority erred in holding that MEGPTCL, EIF and PMC were not related to each other; (v) The adjudicating authority erred in holding that MEGPTCL is not the actual importer and PMC is the owner since MEGPTCL had itself declared it to be the owner of the imported goods; (vi) The so-called additional factors such as extended warranty of ten years, type testing of equipments, liquidated damages, stringent delivery schedule were an afterthought and could not have been considered to justify the over-valuation alleged by the Department; (vii) The contention of the respondents that the contract was awarded under the ICB route has been accepted by the adjudicating authority without critically examining the facts brought on record in the show cause notice. Similarly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Original Equipment Manufactures to EIF with the value of imported goods is incorrect as it fails to consider that the two contracts are entirely different having different obligations, financial exposure, risk undertaken, extended warranty, etc.; (vii) The submission of the department that EIF was only required to supply the equipments manufactured by the Original Equipment Manufactures is erroneous as the same completely ignores the overall scope of the role PMC was required to play; (viii) The submission of the department that PMC is just an intermediary, basis that PMC had sought financial assistance from MEGPTCL and MEGPTCL and opened the transferable Letters Of Credit is without any basis; (ix) The documents relied upon by the department in support of over-valuation documents cannot be relied upon as they were obtained without complying with the provisions of section 138(4) of the Customs Act and have not been proved in accordance with the provisions of the section 139 (ii) of the Customs Act; (x) The invocation of rule 4 of the Valuation Rules by the Department by treating the Original Equipment Manufactures invoice price as the transaction value is without any b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GPTCL cannot be considered as 'importer', as the goods were imported prior to the amendment. 33. The submissions advanced by the learned special counsel appearing for the Department and the learned counsel for the respondents have been considered. DISCUSSION 34. The issues that arise for consideration in this appeal will be considered separately. WHO IS THE IMPORTER 35. It would first be necessary to determine who is the importer in the present case. While it is the case of the Department that MEGPTCL is the importer as it had declared itself to be owner of the goods, it is the case of both MEGPTCL and PMC that the importer is PMC. 36. It will, therefore, be necessary to examine the definition of the term 'importer' under the Customs Act. Section 2 (26) of the Customs Act defines it as follows: "Section 2(26) "Importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes any owner or any person holding himself out to be the importer." 37. It is clear from the above definition that an importer in relation to any goods includes any owner or any person holding himself out to be an importer. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in Nalin Z Mehta vs. CC, Ahmedabad [2014 (303) E.L.T. 267 (Tri.-Ahmd.)] and the relevant paragraph of the said decision is reproduced below: "11. In view of the above reproduced ratio of various judgments, it has to be concluded that an importer under Section 2(26) is a person who has filed the Bills of Entry for the clearances and has paid the Customs duty. The above said judgments also lay down a ratio that an IEC code holder cannot be denied the clearances of consignments if he has filed the Bills of Entry. In these appeals before us, it is undisputed that Bills of Entry are not filed by the appellant herein and in our considered view, he cannot be held as an importer." 42. In Brij Mohan Sood, the Tribunal observed that a financer of goods cannot be treated as the importer and the person who has filed the Bill of Entry and paid the customs duty will be treated as the importer. The relevant paragraph of the said decision is reproduced below: "5. We agree with the above contention of the ld. DR. The financier of the goods or the owners of the same do not become importers and any liability which may arise would fall upon the person who has filed the bill of entry for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther Original Equipments Manufactures namely, Dalian, Sediver and Suzhou and EIF. Back-to-back invoices-one raised by Hyundai on EIF and another raised by EIF on PMC for the same Bill of Lading were noticed. KYC documents and account opening forms submitted to DIFC, Dubai Branch, Statement of accounts, Names of signatories and Directors of EIF. Copies of MOA, Register of Members, Board resolution etc. 3. ICICI Bank, DIFC Branch at Dubai KYC documents account opening forms, details of inward and outward remittances relating to EIF's account with them and some import and Export bills and Financial statements and directors' report of EIF. Documents filed by EIF while applying for Advanced Payment guarantee facility from ICICI Branch, Singapore. 3. Bank of Baroda, Dubai Branch KYC documents account opening forms, Statement of accounts relating to EIF, Invoices raised by three Original Equipments Manufactures, namely, Dalian, Sediver and Suzhou on EIF relatable to supplies to PMC covering 25 consignments and Bank attested copies of invoices. 49. A bare perusal of these documents show that very few documents bear the bank seal and some initials, but majority of the documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs initiated under the Customs Act. When law requires a thing to be done in a particular manner it should be done in that manner alone. The Directorate of Revenue Intelligence had obtained the documents from foreign branches of the Indian banks, but the conditions prescribed under section 138 C (4) of the Customs Act were not fulfilled as the certificate giving the details was not produced. 53. Thus, as the provisions of section 138C (4) of the Customs Act have not been satisfied for the reason that the certificate prescribed therein has not been furnished, the documents obtained by Directorate of Revenue Intelligence from various banks outside India cannot be admitted as evidence. Reliance cannot, therefore, be placed on these documents for this reason. 54. The learned senior counsel for the respondents also made submissions with regard to non-fulfillment of the provisions of section 139 (ii) of the Customs Act. It is the case of the respondents that the presumption under section 139 (ii) of the Customs Act would not be available as the authenticity of documents have been challenged. Under section 139 (ii) of the Customs Act, where any document has been received from any place o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l within any of the eight clauses of rule 2(2) of the Valuation Rules. It is no doubt true that Dharmesh Parekh was an employee of PMC and that PMC and EIF were part of the Consortium and had entered into an agreement for supply of Transmission Equipment, and that Dharmesh Parekh, being an employee of PMC, had signed the contract that was entered between EIF and Original Equipment Manufactures on behalf of EIF, but there is nothing which may prohibit and disqualify an employee of PMC to be authorized by EIF for signing a contract on its behalf. The said act of authorizing an employee of PMC to sign a contract on behalf of EIF cannot lead to a conclusion that EIF and PMC were related to each other under rule 2(2) of the Valuation Rule. 60. Learned special counsel for the Department also contended that since the contracts between EIF and Original Equipment Manufactures did not indicate the place where they were signed PMC and EIF are two sides of the same coin. 61. This submission cannot be accepted. Allegations of over-valuation, being serious in nature, cannot be said to be established merely because place was not mentioned in the contract or for the reason that an employee of PM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Operational since 2012 500 100 18 1.2 Multipurpose terminal T-3 at Hazira Operational since 2012 900 180 18 2 Dry bulk 2.1 Multi-Commodity 2.1.1 Dry Bulk Terminal at Tuna, Kandla Operational since 2014 1150 230 24 2.1.2 Dry Bulk Terminal at Dahej Operational since 2010 1150 230 48 2.2.1 Coal Terminal at West Basin, Mundra Operational since 2010 2400 480 32 2.2.2 Coal Terminal at Mormugao Port Trust Operational since 2014 450 90 32 2.2.3 Coal Terminal at Visakhapatnam Port Trust Operational since 2014 400 80 19 2.3 Agro 2.3.1 Fertilizer Cargo Complex & Agri Park at Mundra Operational since 2010 225 45 12 3 Liquid Bulk 3.1 Multi Commodity 3.1.2 Liquid Bulk terminal at Hazira Operational since 2013 350 70 12 4 Container terminal 4.2 Container terminal - AMCT at Mundra Operational Since 2007 1150 230 27 4.3 Container terminal - CT 3 at South Basin, Mundra Operational Since 2012 1400 280 18 5 Specialised terminals &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 4 Container terminal 4.1 Container terminal No 1 (MICT) at Mundra Operational Ground improvement against liquefaction by vibro stone column was adopted for open-type berth with diaphragm wall tie back system. 4.2 Container terminal No 2 (CT 2) at Mundra Operational 4.3 Container terminal No 3 (CT 3) at South Basin, Mundra Operational First time in India marine piles were done by hydraulic rotary rigs from travelling platform 4.4 Container terminal at Hazira Operational 5 Specialised terminals 5.1 RO RO Terminal Operational 5.2 Steel Terminal Operational 67. In view of the aforesaid facts there is no merit in the contention of the Department that PMC was only a contractor acting as a conduit on behalf of the buyer. EPC CONTRACT 68. An important aspect that needs to be addressed is about the nature of the contract entered into between PMC and EIF. While the adjudicating authority in paragraph 5.1.3.22 held that the contract in the nature of an EPC contract, it is the case of the Department that the said contract is merely a supply contract. 69. Learned special coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission Line (Quad Moose) from Akola I to Akola II. For Substations Scope of Work: Design, Engineering, Manufacture, Procurement, Assembly and Testing at Works, Type testing as required, Packing & Forwarding for Supply on CIF/Ex-works Basis, Port Handling and Clearance, Reconciliation with Custom Authorities for the Imported Goods, Inland Transportation and Transit Insurance, Transportation to Site, Unloading, Storage, Handling at Site, Soil Investigation, Construction, Erection, Testing and Commissioning including associated Civil Works of 765KV & 400KV Substations including all equipments, Auto Transformers & Reactors associated with 765KV Tiroda-Koradi III-Akola II-Aurangabad Transmission System complete in all respect with all fittings and accessories as per Technical Specifications for evacuation of Power From North-Eastern part of Maharashtra, India. Construction of 765KV & 400KV Sub stations with the provision of following bays as per the Single Line Diagram:- 1. Establishment of 765/400KV Sub station at Tiroda. * 1 x 1500 MVA, 765/400KV Transformer with bays on 765KV and 400KV side (4x500 MVA I ph unites providing 1x1500 MVA bank with one spare unit) * 2x240 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in nature of an EPC contract. 72. The PMC led Consortium was found to be the lowest bidder for both the Transmission and substation packages. One of the Consortium members with respect to both the contract was EIF. The Consortium members distributed the work for execution of the entire project amongst themselves. MEGPTCL was only concerned with the total project which included supply of items and performance of services. 73. The Department does not dispute that the contract awarded by MEGPTCL to PMC led Consortium was an EPC contract. However, the Department has raised doubts on the contract entered between EIF and PMC by stating that the same was substantially similar to the contract entered between EIF and Original Equipment Manufacture. 74. The purchase order dated 27.09.2010 raised by MEGPTCL on PMC refers to various documents, one of which is the pre-bid minutes of the meeting held on 21.08.2010. The last two lines of the first paragraph state "all the terms and conditions other than those listed in this contract shall be as per the tender documents and the correspondence referred above". This means that the four documents mentioned in the reference column of the purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India without having any service support network in India, MEGPTCL insisted for extended warranty of Ten (10) years on each of the equipment with a confirmation that HHI would open the service support network in India within One year in case the award is decided in favour of PMC. MEGPTCL further insisted that the Transformers and Reactors of HHI does not have type test certificate for Indian conditions so PMC would be required to enforce EGI/HHI for conducting the type test for the equipment in case of award. 5. Type Test Charges for Transmission Line Tender: MEGPTCL informed PMC that only design of Tower structure and foundation shall be provided by MEGPTCL, while type testing of all other items shall be undertaken by PMC as per technical specification, as required without any extra cost implication to MEGPTCL. PMC agreed. 6. Royalties: PMC requested MEGPTCL to reimburse the Royalty charges at actuals on the raw material of civil works. MEGPTCL denied and informed to comply the Tender conditions. 7. Right of Way: PMC requested MEGPTCL to exclude the ROW scope from the Bidder's scope. MEGPTCL denied and informed to comply the Tender conditions. 8. PMC requested MEGPTCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents. Balance 10% of the Contract price of supplies shall be paid through LC on Taking Over of each Auto Transformer Bank, Reactor Bank, Dis Insulator and OPGW upon submission of the supporting documents. * PMC informed EGI that this would be first supplies of such high voltage Auto Transformers & Shunt Reactors by Hyundai Heavy Industries Co. Ltd. South Korea (HHI) in India and there is no established service support network of HHI for said equipment in India, MEGPTCL has insisted for extended warranty of 10 (ten) years on each of the equipment with a confirmation that HHI would open their service support network in India within 01 (one) year in case of the award is decided in favour of our Consortium. EGI noted the same and agreed in principle to the extended warranty requirement of 10 (ten) years however, EGI informed PMC that there shall be considerable financial liability due to the extended warranty period clause. PMC noted the same. * PMC informed EGI that MEGPTCL has insisted for fresh type testing of Auto Transformers & Shunt Reactors. EGI agreed to perform the type testing of Auto Transformers and Shunt Reactor in case of the award is decided in favour of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Original Equipment Manufactures. For this purpose, the provision of rule 12 of Valuation Rules read with section 14 of the Customs Act have been invoked and the redetermination of the value is sought to be made under rule 4 of the Valuation Rules read with section 14 of the Customs Act. 80. It has already been found that the documents, which form the basis for the proposed redetermination of value, are inadmissible in evidence. Therefore, they cannot be considered for seeking a redetermination of the value. 81. Even otherwise, the value could not have been rejected and redetermined. 82. It needs to be remembered that number of players were setting up coal based Power Generation Plants in the State of Maharashtra and so there was a huge requirement of Transmission Network for evacuation of power from such Thermal Power generation plants. MSETCL, a Government of Maharashtra Undertaking, was examining setting up Transmission Networks. Accordingly, a Special Purpose Vehicle namely, MEGPTCL was formed for development of 765 KV intra state Transmission system, comprising of 2 x 765 KV S/C Tiroda - Kordai - Akola - Aurangabad Transmission Line along with Associated Substation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of 25 years for development of Transmission Project. ICB process was followed by MEGPTCL for inviting tenders for appointment of EPC contractors. Two separate tenders were issued by MEGPTCL for Transmission Line and Substation packages respectively. As noticed above, the tenders were published in leading news-papers and were also sent to various embassies. The Consortium led by PMC emerged as the successful bidder for both the Transmission Line and Substation and accordingly purchase orders and service orders were placed on the lead member of the Consortium for Transmission Line and Substation packages. Prior to the award of the tender, a pre bid meeting was held between MEGPTCL and PMC in which the terms of the projects were discussed and PMC was informed about the terms of bidding namely, requirement of extended warranty, type testing, liquidated damages etc. 84. The Consortium for the Transmission Line led by PMC consisted of PMC, EIF and Gammon India Ltd. For substation package the Consortium led by PMC consisted of PMC, EIF and Hyundai Heavy Industries Co. Ltd. 85. The details of Consortium Members with the scope of work is as follows: Transmission Lines : Supply Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistered the contract between PMC and EIF with the Customs House at Kandla as prescribed under regulation nos. 4 and 5 of the PIR. Based on the above registration, the equipments were imported as per approved list of goods and cleared by PMC and were dispatched to MEGPTCL as per the contract conditions. Consequently, the said goods were assessed under Chapter Heading 98.01 of the First Schedule to the Tariff Act. PMC also imported disc insulators and optical fibre ground wire and the same were cleared on payment of duty, as concessional customs duty benefit was not available in respect of these items. No objection was raised by the Department at the time of clearance of goods and the assessment was finalized under section 14 of the Customs Act. All other Bills of Entry, where the benefit under Chapter Heading 98.01 of the Tariff Act was availed, were assessed provisionally and subject to reconciliation under PIR. There is no dispute that all goods/items have been imported against the approved list of goods registered with Customs and the value as declared by PMC in the Bills of Entry have also been accepted by Customs. There is also no dispute that the goods imported are mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating authority has found no merit in the allegations proposing redetermination for more than one reason and has consequently dropped the proceedings against all the respondents. 91. As noticed above, 26 out of the 57 consignments were cleared by PMC on merit rate of duty. In other words, the said 26 consignments have been finally assessed to duty, basis the value declared by PMC and the said assessment proceedings under section 14 of the Customs Act have attained finality. With respect to balance 31 consignments, the same have been cleared under concessional rate of duty under Chapter Heading 98.01 of the Tariff Act read with PIR. The respondents have pointed out that the value of the entire 57 consignments, including the 26 consignments for which the assessment became final under section 14 of the Customs Act, has been redetermined and that while clearing the said 26 consignments, customs duty aggregating to approximately Rs. 400 Crores has been paid. The submission is that it is not open to the Department to have two different values for the same goods, one under section 14 of the Customs Act for assessment of duty and another for the purpose of section 111(m) of the Customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in this behalf: Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf:" 96. The Supreme Court in Wipro Ltd. vs. Assistant Collector of Customs [2015 (319) E.L.T. 177 (SC)] noticed that under the unamended provisions of section 14 of the Customs Act, the principle was to find out the valuation of goods "by reference to the value" and it introduced a determining / fictional provision by stipulating that the value of all the goods would be the price at which such or like goods are "ordinarily sold". However, under the amended provisions, the valuation is based on the "transaction‟ price namely, the price "actually paid or payable for the goods". It is in this context, that the Supreme Court observed: "26) On the aforesaid examination of the scheme contained in the Act as well as in the Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact whether actual cost is ascertainable or not. Having referred to the scheme of Section 14 of the Rules in detail above, this cannot be countenanced. This proviso, introduces fiction as far as addition of cost of loading, unloading and handling charges is concerned even in those cases where actual cost paid on such an account is available and ascertainable. Obviously, it is contrary to the provisions of Section 14 and would clearly be ultravires this provision. We are also of the opinion that when the actual charges paid are available and ascertainable, introducing a fiction for arriving at the purported cost of loading, unloading and handling charges is clearly arbitrary with no nexus with the objectives sought to be achieved. On the contrary, it goes against the objective behind Section 14 namely to accept the actual cost paid or payable and even in the absence thereof to arrive at the cost which is most proximate to the actual cost. Addition of 1% of free on board value is thus, in the circumstance, clearly arbitrary and irrational and would be violative of Article 14 of the Constitution. ***** 34) In the present case before us, the only justification for stipulating 1% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, this may be subject to such other conditions which can be specified in the form of Rules made in this behalf. 23) As per the first proviso of the amended Section 14(1), in the transaction value of the imported goods, certain charges are to be added which are in the form of amount paid or payable for costs and services including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner which can be prescribed in the rules. Sub-section (2) of Section 14, which remains the same, is an over-riding provision which empowers the Board to fix tariff values for any class of imported goods or export goods under certain circumstances. We are not concerned with this aspect in the instant case." 98. Thus, what has to be seen under section 14(1) of the Customs Act, as amended in 2007, is the transaction value of the goods imported or exported for the purpose of customs duty and transaction value is stated to be the price actually paid or payable for the goods when sold for export to India for delivery at that time and place of impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the alleged relationship between EIF and PMC. The contract was awarded to the PMC led Consortium by MEGPTCL after following the International Competitive Bidding process. The said bids were independently evaluated by an expert of Price Waterhouse Coopers. Both Transmission Line and Substation projects bids submitted by PMC led Consortium were found to be the lowest. The Department should have brought on record independent evidence in the form of contemporaneous data to show that the price of the imported goods were over-valued. In fact, PMC has stated that the bid price of PMC led Consortium was comparable to the project cost of similar project set up by a Public Sector Undertaking namely, Power Grid Corporation of India Ltd. and the adjudicating authority also accepted this contention. Paragraphs 5.1.3.25 and 5.1.3.25.1 of the order of the adjudicating authority deal with the said submission and are reproduced below: "5.1.3.25 Further, I find that the notice has contended that value of the current contract in respect of laying the transmission lines and erection of sub-stations was comparable with the similar project executed by the leading public sector company Mis Power Grid C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of the project is in line with the market price trend. Thus, while the Department has placed reliance on evidence which have been found to be inadmissible, the respondents have submitted contemporaneous data with evidence in the form of a letter stating that in case of extended warranty the premium on the product would be 8 to 9% per year. No error can, therefore, be found in the view taken by the adjudicating authority and it is also in accordance with the law laid down by the Supreme Court in Commissioner of Customs vs. South India Television 2007 [2007 (214) E.L.T. 3 (SC)] wherein it was held that in the absence of contemporaneous imports, the transaction value cannot be discarded. The transaction value, therefore, has to be accepted and the question of redetermination of the value does not arise at all. 105. It is also important to examine the presence of MSETCL when the bidding was in process and when PMC was awarded the contract. Initially, by a letter dated 01.07.2010, AEL proposed MSETCL, a Government of Maharashtra undertaking, to form a Joint Venture for development of Transmission System, pursuant to which a Joint Venture was formed between AEL and MSETCL where AEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .27.7 concluded that the contract as a whole was required to be assessed and not individual consignments. 111. The learned special counsel for the appellant challenged the said finding and submitted that even if the imports are covered by a single contract, the assessment thereof is required to be carried out against individual imports, with the only difference being that all the imports are housed under Tariff Heading 98.01 of the Tariff Act. Learned special counsel also submitted that it may not be necessary to carry out an assessment in respect of classification of each and every product but there is no bar to ascertain the transaction value of each individual import consignment in terms of the Valuation Rules, even though the contract may have been registered under PIR. 112. This issue was examined at length by this Bench in Adani Power Maharashtra Ltd. and after examination of the provisions of Chapter 98 of the Tariff Act and regulations 2,4,5 and 7 of the PIR, the Bench observed as follows: "A conjoint reading the aforesaid provisions makes it is clear that Heading 98.01 of the Tariff Act shall be available to the goods which are imported under a specific contract regist ..... X X X X Extracts X X X X X X X X Extracts X X X X
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