2005 (11) TMI 70 - SC - Customs

Supreme Court orders Tribunal to reevaluate design vs. engineering charges for customs duty

GUJARAT MINERAL DEVELOPMENT CORPN. LTD. Versus CCE. & C., AHMEDABAD

The Supreme Court allowed the appeal, directing the Tribunal to reconsider the matter in light of the distinction between design and engineering charges ... Valuation (Customs) - Designing and Engineering - Held that:- appellant would be liable to pay the import duty on the designing and engineering so far as it has gone as an input into the manufacture, supply and transportation to GDR Port of machineries, equipment, but strongly denies its liability to pay the customs duty on the cost of designing and engineering which has gone into the erection, commissioning and supervision of short term and long term tests of machinery and equipments, as the latter has taken place in India and is a post importation activity - Tribunal has not considered this aspect of the matter and therefore the order of the Tribunal be set aside and the matter be remitted to the Tribunal for a fresh decision. Accordingly, we accept this appeal, set aside the order of the Tribunal and remit the matter back to the Tribunal for a fresh decision in accordance with law and if need be by taking additional evidence - Decided in favour of assessee. Issues:1. Appeal against rejection of refund claim for customs duty on design and engineering charges.Analysis:The case involved a statutory appeal under Section 130E of the Customs Act, 1962, challenging the final order passed by the Customs, Excise and Gold (Control) Appellate Tribunal. The appellant, a government undertaking, imported machinery and accessories for a lignite project from a foreign supplier. The Customs Authorities accepted the price of the mining equipment as per the invoices and completed the assessment. The appellant paid the customs duty charges under protest, including charges for design and engineering. The appellant filed a refund claim for the customs duty paid on design and engineering charges, which was rejected by all adjudicating authorities.The main contention raised by the appellant was the liability to pay import duty on design and engineering charges that went into the manufacture, supply, and transportation of machinery, but not on charges related to erection, commissioning, and supervision activities carried out in India post-importation. The counsel argued that the Tribunal did not consider this aspect, leading to the decision to set aside the Tribunal's order and remit the matter for a fresh decision. The court agreed with the appellant, allowing the appeal, setting aside the Tribunal's order, and directing a fresh decision with the possibility of additional evidence if required. The court emphasized the need for expeditious disposal of the matter due to the extended period the customs duty amount had been held by the authorities.In conclusion, the Supreme Court allowed the appeal, directing the Tribunal to reconsider the matter in light of the distinction between design and engineering charges related to pre-importation and post-importation activities. The court highlighted the importance of a fresh decision and prompt resolution of the case due to the extended period the customs duty amount had been pending.