1990 (5) TMI 212

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....pares and parts free of charge in lieu of replaced parts for the period of the contract. 1.2 A special type of compressor of the above Ion-Implanter machine became defective and needed replacement. The supplier in terms of the above contract despatched a replacement 'compressor cryo 208'. The compressor was supplied on charge basis and the value for custom purposes only was indicated as such in the invoice. The Appellants filed a bill of entry dated 8-7-88 for the clearance of the above compressor claiming OGL No. 4/88-91 in respect of Import Trade Control. 1.3 However, on examination of the consignment by the Customs it was found that the supplier had also included some other parts of the above machine besides the compresso....

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....(b)      No remittance shall be allowed, except for payment of insurance and freight charges where the replacement of goods by the foreign suppliers is subject to the payment of insurance and/or freight by the importer and documentary evidence to this effect is produced at the time of making the remittance; (c)      the following documents shall be produced to the satisfaction of the Customs authorities, at the time of clearance of the replacement goods :- (i)       Original letter from the foreign supplier as evidence of goods being supplied free of cost, in the case of free replacements; (ii)      a survey certificate issue by....

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....oods have been supplied on no charge basis under a service contract No. 3000 SM 60670. The relevant service contract indicates payment of US $ 22,600 which covers inter alia parts and labour. The adjudicating authority, therefore, has inferred that the parts have been paid in advance and it cannot be said that they have been supplied free of charge. Accordingly, the goods have been confiscated under Section 111(d) with an option to the appellants to redeem them on a fine of Rs. 1,75,000/-. A personal penalty of Rs. 2,500/- has also been imposed on the appellants. 2. Learned Consultant Shri K.K. Chopra for the appellants has urged that the provisions of OGL 4/88-91 squarely applies to the facts of this case inasmuch as the goods have....

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....h the dispute has been raised by the department and the order is in appeal before us now. 4.1 Coming to the merits of question whether the parts are covered by OGL-4 we find that the reasonings of the adjudicating authority in denying the benefit of the said OGL is correct. No doubt, the parts are covered under warranty and the invoice also shows that the parts have been supplied free of charge, it cannot be said that it is actually so in the face of the service contract. Service contract to the tune of US $ 22,600 covers parts and labour. It is, therefore, reasonable to infer that the parts under consideration here have been paid in advance and the conditions of OGL-4, item (6) thereof are not strictly complied with. The goods are,....