Tribunal: Technical Assistance & Commissioning Charges Excluded from Assessable Value of Imported Goods.

The tribunal ruled in favor of the importer, determining that technical assistance charges and charges for erection and commissioning of the plant are not includible in the assessable value of imported goods. The majority decision allowed the importer's appeal and dismissed the revenue's appeal, distinguishing the case from the precedent set in Essar Gujarat.

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Issues Involved:
1. Addition in the assessable value on account of payment of design, engineering, consultancy, and technical know-how fees.

Issue-wise Detailed Analysis:

1. Addition in the Assessable Value on Account of Payment of Design, Engineering, Consultancy, and Technical Know-How Fees:

Arguments by Assessee-Appellant:
- The appellant argued that the agreements dated 8-3-1999 and 21-2-1988 are independent, with the former relating to collaboration and the latter to technical know-how, engineering services, training, and start-up.
- The collaboration agreement provides for technical assistance, training, and consideration for these services, which are separate from the agreement for the supply of equipment.
- The appellant cited several precedents where similar fees were not included in the assessable value, such as Polar Marmo Agglomerates Ltd., Panalfa Dongwon India Ltd., S.D. Technical Service, Birla Tyres, Ferodo India (P) Ltd., Hoerbiger India Pvt. Ltd., Himson Textile Engg. Industries Ltd., Neg Micon (India) Pvt. Ltd., and Mando Brake Systems India Ltd.

Arguments by Revenue:
- The revenue argued that the agreements should be read together, as without the know-how, the plant is of no use. They relied on the Apex Court decision in Essar Gujarat, where the importer and provider of services were the same, and the ultimate aim was to commission the plant.

Findings:
- The tribunal found that the reliance on Essar Gujarat by the revenue was misplaced because, in Essar Gujarat, the second-hand plant was imported and the know-how fees were paid to a person other than the supplier. In the present case, the supplier of the goods is also the collaborator who is directly receiving the fees.
- The tribunal accepted the appellant's argument, applying the ratio of the decisions cited by the appellant, and concluded that the technical assistance charges and charges for erection and commissioning of the plant are not includible in the assessable value of imported goods.

Majority Order:
- The majority held that the technical assistance charges and charges for erection and commissioning of the plant are not includible in the assessable value of imported goods, allowing the appeal of the importer and dismissing the appeal of the revenue.

Separate Judgments:

Judgment by G.N. Srinivasan, Member (J):
- The appeals were filed against the order of the Collector of Customs (Appeals), which included DM 2,57,167 in the valuation of the imported item but excluded DM 3,01,254.
- The collaboration agreement and the supply contract were analyzed, showing that both agreements should be read together.
- The Collector's approach was deemed wrong, and it was concluded that the agreements dated 21-2-1988 and 9-3-1989 should be read as a single document.
- The Supreme Court judgment in Essar Gujarat was considered binding, leading to the restoration of the Assistant Collector's order.

Judgment by Gowri Shankar, Member (T):
- The focus was on payments made for design, engineering, consultancy, and technical know-how fees.
- The collaboration agreement was found to be independent of the supply contract.
- The Supreme Court judgment in Essar Gujarat was distinguished as it pertained to a condition of sale, which was not the case here.
- The charges for setting up the plant were considered post-importation expenses and not includible in the assessable value.
- The appeal of the importer was allowed, and the department's appeal was dismissed.

Difference of Opinion:
- The difference of opinion between the two members led to the referral to a third member to answer the following questions:
(a) Whether the charges payable as technical assistance towards the manufacture of the finished goods by the importer are to be included in the assessable valueRs.
(b) Whether the charges for erection and commissioning of the plant were includible in the valueRs.
(c) As a consequence of the answers to the preceding questions, whether the importer's appeal is to be allowed or dismissed and whether the department's appeal is to be allowed or dismissed.

The detailed analysis shows that the tribunal ultimately decided in favor of the importer, ruling that the technical assistance charges and charges for erection and commissioning of the plant are not includible in the assessable value of imported goods.

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