TaxTMI 
TaxTMI 
2012 (9) TMI 712
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....cts and legal issues and therefore, are being disposed of by this common order. 2. Heard learned Shri Arvind Dattar, Senior Advocate on behalf of MRPL and Shri P.R.V. Ramanan, Special Counsel on behalf of the revenue. Extensive hearings were held on seven days i.e. on 10.04, 11.04, 19.06, 20.06, 21.06, 27.06 and 28.06.2012. Both sides filed gist of oral submissions which have been taken into account. 3. The relevant facts in brief are as follows: (a) MRPL, in 1993, commenced setting up a refinery at Mangalore with a capacity to refine 3 million metric tones per annum (MMTPA) of crude oil. The refinery commenced its commercial operation during March 1996. Subsequently, during 1997-1998, MRPL commenced Phase-II expansion of the refinery to increase the refining capacity from 3 MMTPA to 9 MMTPA. MRPL imported various equipments in this regard under project imports. As a part of Phase-II expansion, MRPL installed a Continuous Catalytic Reforming Unit (hereinafter referred to as CCR2) to produce unleaded high-octane petrol from Naptha. This was set up as a secondary processing unit. The unit was having capacity to process 9400 BPSD (barrels per single day) o....
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....CCR-2. They failed to disclose these two payments and thus undervalued the imported consignments. (d) Accordingly, four show-cause notices were issued by ADG DRI answerable to the Commissioner of Customs (Import) Mumbai, Commissioner of Customs (Air-cargo-Import) Mumbai, Commissioner of Customs Import-JNPT and Commissioner of Customs, Mangalore inter alia proposing enhancement of value of the goods imported and demanding differential customs duties and proposing imposition of penalties. (e) CBEC vide Notification No. 133/2006-Cus. (N.T.) dated 08.12.2006 appointed the Commissioner of Customs, Mangalore as the common adjudicating authority to adjudicate the four show-cause notices. (f) After hearing the appellants, the Commissioner decided the four show-cause notices and passed the impugned order dated 30.03.2007. The gist of the order, in respect of each of the show cause notices are reproduced below: Import through Mangalore (a) The goods covered under the subject 3 Bills of Entry (Bs/E No. 596, 599 and 600 all dated 05.03.1999) were held liable for confiscation under Section 111(m) of Customs Act, 1962. Since, the goods were not availabl....
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....package and the extended basic design and engineering in terms of Rules 4 read with 9(1)(b)(iv) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (hereinafter referred to as CVR, 1988) read with Section 14 of the Customs Act, 1962 and demand duty short paid under Section 18(2) of Customs Act, 1962. Import through Air-Cargo Complex, Sahar, Mumbai (a) The goods covered under 16 Bills of Entry were held liable for confiscation under Section 111(m) and since the goods were not available for confiscation, a fine of Rs. 90,000/- was imposed under Section 125 of the Customs Act 1962 and a penalty of Rs. 10,000/- was imposed on MRPL under Section 112(a) of the Customs Act, 1962. (b) He directed the proper officer to finalize the 16 Bills of Entry assessed provisionally, by including the proportionate costs of the basic design package and the extended basic design and engineering in terms of Rules 4 read with 9(1) (b)(iv) of CVR, 1988 read with Section 14 of the Customs Act, 1962 and demand duty short paid under Section 18(2) of the Customs Act 1962. Import through Nhava Sheva, Maharastra (a) The goods covered under 2 Bills o....
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....e new sub-section (11) will apply only to the newly substituted Section 28 and will not apply to show-cause notices issued under the old Section 28 prior to 08.04.2011. (c) There is no effective validation clause to validate show-cause notices issued under the old Section 28, as (i) the amendment does not remove the basis of the Supreme Court decision referred to hereinabove; and (ii) there is no clause which deem a demand made under the old law to be a demand made under the newly substituted provision. Therefore the demands made vide show-cause notices issued under the old Section 28 of the Act are without jurisdiction, and, are entirely unsustainable in law. 4.2. The learned senior advocate also assails the order of the Commissioner on other grounds and the gists of his submissions are as follows: (a) Exhibit G to contract 9802-01 between. MRPL and the Supplier only provides the details of off-shore equipment and materials such as (i) item number; (ii) service/function; (iii) quantities to be supplied; and (iv) whether the sourcing is to be from imported sources or domestic sources. (b) The imported equipment could not have been manufactured only on ....
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....sic Design Package and the Extended Basic Design Package carried out outside India is without any factual basis and contrary to the submissions of the appellant which have also been referred to in para(s) 23 to 23.4 of the impugned order itself. (h) It is settled by various judicial decisions that the Basic Design for engineering package includes details such as the layout, the position of equipment, the specification of equipment in terms of volume, diameter etc., and, the provisions of Rule 9(1)(b)(iv) of the erstwhile CVR, 1988 cannot apply to such basic design as they have only a remote connection with the engineering drawing and designs which are necessary for production of the imported equipment. Only the detailed design which is necessary for the manufacture of equipment, if at all, can be included in terms of Rule 9(1)(b)(iv) of the erstwhile CVR, 1988 in the assessable value of the imported equipment, if the same is already not specifically included in the cost of the imported equipment sold. (i) The mere fact that the agreement(s) were entered into on the same day and that the parties were common cannot lead to any adverse inference especially when ....
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....(xv) Commissioner of Customs vs. Ferodo India Ltd. [2008 (224) E.L.T. 23 (S.C.)] (xvi) Rashtriya Ispat Nigam Ltd. vs. Commissioner of Customs, Visakhapatnam [2006 (197) E.L.T. 276 (Tri.-Bang.)] 5.1. The learned special counsel, Shri P.R.V. Ramanan contested the challenge to jurisdiction relying on the decision of the Tribunal in the case of Sundaram Finance vs. Commissioner of Customs reported in 2012 (279) E.L.T. 220 (Tri.-Chennai) and the decision of the Tribunal in the case of M/s Bharti Airtel Ltd. & Others vs. Commissioner of Customs, Bangalore, vide Final Order Nos. 365-373/2012 dated 7.6.12, reported in 2012-TIOL-746-CESTAT-BANG. 5.2 The learned special counsel, Shri P.R.V. Ramanan supported the order of the Commissioner with the following submissions: (a) The value attributable to (i) Basic Engineering Design Package (BEDP) supplied by the Process Licensor UOP-IA and (ii) Extended Basic Engineering (EBE) and Detailed Design Engineering (DDE) provided by the supplier (i.e. the Japanese consortium) to itself requires to be added to the value declared by MRPL in the Bs/E relating to various imported goods. (b) The requirement of BEDP is governed by....
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....) A conjoint reading of Rules 4 and 9 of CVR, 1988 shows that transaction value must include all elements that normally form part of the price actually paid or payable. Even after additions under Rule 9, the determination of value is under the Transaction Value method. In the instant case, only the Transaction value method has been adopted. There was, thus, no need to invoke Rule 10A of CVR. (k) The rationale for inclusion of cost of goods and services under Rule 9 is to place the vertically integrated operations on par with split operations . Parity is ensured so that the transaction value does not get skewed on account of different practices/arrangements. (l) Rule 9 envisages addition of the value of goods and services supplied for use in connection with the production and sale for export of imported goods to the price actually paid or payable for such imported goods. The expression in connection with is of wide import. This does not imply only immediate nexus to vendors costs and prices as argued in the present case. (m) The expression Engineering appearing in Rule 9 (l) (b) (iv) is, again, of wide import. (n) The expression necessary appe....
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....PL case, the licensor himself undertook to supply the equipments/materials apart from providing the design and engineering specification. The arguments taken by APL were the same as those which are now taken by MRPL. He also submits that the ratio of the judgment rendered by the Hon ble Tribunal in the case of Collector vs Intercom Engineers Pvt. Ltd. reported in 1987 (28) ELT 458, though related to Central Excise matter, applies squarely to the instant case inasmuch as the issue is related to inclusion of costs of design and engineering in the machinery value. 6. The learned Sr. advocate for the appellant-assessee made the following submissions in his rejoinder: (a) MRPL had submitted an Off-shore Supply Contract bearing No. 9802-01 as required under Regulation 5 of the PIR. This refers to the Extended Basic Design (EBD) and the Basic Engineering Design (BED). When there is import of goods through the project import mechanism, there is no statutory requirement on the importer to submit separate and independent contracts with regard to basic design and extended basic design. (b) The patent of UOP is a process patent and not a product patent. ....
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....stifying invocation of extended time limit for demand of duty and for imposing penalties? (f) Whether fine can be imposed under Section 125 when the goods were held not available for confiscation? (g) Whether penalties under Section 114A should be imposed equivalent to the duty demanded plus the corresponding interest accrued under Section 28AB of the said Act instead of penalties equivalent to the duty demanded ? On the issue of jurisdiction of ADG, DRI to issue the show-cause notices. 8. Coming to the preliminary issue as to whether the ADG, DRI had the jurisdiction to issue show-cause notice prior to amendment dated 16.9.2011, we find that the same stands decided by this Bench in the case of Bharti Airtel Ltd. & Others [2012-TIOL-746-CESTAT-BANG] and the relevant portion of the findings are as follows : 11. We hold that the ADG DRI was competent to issue the impugned show-cause notices for the following reasons. (a) We find that ADG DRI has been appointed as Collector by Notification No. 19/90-Cus (NT) dated 26.4.90. We also note that the ADG DRI has been specifically empowered by the Board vide Circular No. 4/99-Cus dated 15.2.1999 ....
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....al holding as follows : It is very clear that the Commissioner of Customs (Preventive) does not have jurisdiction to issue the impugned show-cause notice and in view thereof he could not have the jurisdiction to adjudicate the matter when imports have taken place at Bombay Customs House. In the Kripa Shankar case, the show-cause notice was issued by the Commissioner of Customs (Prev.) but the adjudication was done by the Commissioner of Customs. The Tribunal held that the show-cause notice was issued by a proper officer under Section 28 of the Customs Act. The Hon ble Supreme Court in the combined decision dated 18.02.2011 in the case of Syed Ali and Kripa Shankar has held that merely appointing a person as an officer of Customs is not sufficient for issuance of notice under Section 28. The said decision did not deal with any show-cause notice issued by ADG DRI. (d) In a matter involving issue of show-cause notice by ADG DRI, the decision of the Mumbai bench of the Tribunal in the case of Chandna Impex Pvt. Ltd. was challenged before the Hon ble Supreme Court. The Hon ble Supreme court vide order dated 06.07.2011 remitted the matter to the Tr....
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....nt to Section 28 was by way of inserting sub-section (11) which reads as under: Notwithstanding anything to the contrary contained in any judgment, decree, or order of any court of law, Tribunal or other authority, all persons appointed as officers of Customs under sub-section (1) of Section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section. 9.1. The core dispute relates to interpretation of Rule 9 of Customs Valuation Rules. At this juncture, it would be appropriate to reproduce the relevant provisions of the Customs Act and the CVR, 1988, which are reproduced below: Section 2 (41) value , in relation to any goods, means the value thereof determined in accordance with the provisions of sub-section (1) or sub-section (2) of section 4. Section 14 of the Customs Act : Valuation of goods for purposes of assessment (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by re....
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....in whole or in part, of a debt owed by the seller. Activities undertaken by the buyer on his own account, other than those for which an adjustment is provided in Rule 9, are not considered to be an indirect payment to the seller, even though they might be regarded as of benefit to the seller. The costs of such activities shall not, therefore, be added to the price actually paid or payable in determining the value of imported goods. The value of imported goods shall not include the following charges or costs, provided that they are distinguished from the price actually paid or payable for the imported goods : (a) Charges for construction, erection, assembly, maintenance or technical assistance, undertaken after importation on imported goods such as industrial plant, machinery or equipment; (b) The cost of transport after importation; (c) Duties and taxes in India. The price actually paid or payable refers to the price for the imported goods. Thus the flow of dividends or other payments from the buyer to the seller that do not relate to the imported goods are not part of the customs value. Rule 9 of CVR, 1988 Cost and services. - (1) In determining the transac....
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....delivery of the imported goods at the place of importation; and (c) the cost of insurance : Provided that - (i) where the cost of transport referred to in clause (a) is not ascertainable, such cost shall be twenty per cent of the free on board value of the goods; (ii) the charges referred to in clause (b) shall be one per cent of the free on board value of the goods plus the cost of transport referred to in clause (a) plus the cost of insurance referred to in clause (c); (iii) where the cost referred to in clause (c) is not ascertainable, such cost shall be 1.125% of free on board value of the goods; Provided further that in the case of goods imported by air, where the cost referred to in clause (a) is ascertainable, such cost shall not exceed twenty per cent of free on board value of the goods: Provided also that where the free on board value of the goods is not ascertainable, the costs referred to in clause (a) shall be twenty per cent of the free on board value of the goods plus cost of insurance for clause (i) above and the cost referred to in clause (c) shall be 1.125% of the free on board value of the goods plus cost of transport for clause (iii) above. (....
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....s, it can be seen that the transaction value to be determined under Rule 4 of the Customs Valuation Rules envisages adjustments to be made in accordance with the provisions of Rule 9 of the said Rules. For example, as the cost of transport to the place of importation is includable to determine the transaction value, in cases where the invoice refers to FOB value, the cost of transport as above requires to be added in terms of Rule 9(2). The value arrived at after adjustments in accordance with the said Rule, continues to be transaction value. 9.3. When a person buys a product available, off-the-shelf, he need not be concerned with the Engineering Design and services which have gone into the manufacture of such product. He has to merely order by giving the specifications. If a person wants to buy an Air Conditioner, he may specify whether it should be window type or split type and also specify the tonnage besides the brand name. He may consult a specialist to identify such requirements. These specifications are in the nature of buyers assist and the cost incurred for getting such specifications cannot become part of value of the goods in the hands of the supplier. 9.4. When a ....
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....s and services supplied by the buyer free of charge or at a reduced cost for use in connection with the production and sale of imported goods to the seller and to the extent that such value has not been included in the price actually paid or payable. To illustrate, the seller may have manufactured equipments of a design, drawings whereof were made available by the buyer say by engaging an independent expert agency in the country of the seller. Although the seller has not incurred any expenditure on the technical/engineering design of the equipment manufactured by it yet the price paid for securing the engineering designs and drawings will be a component of the value of the equipment manufactured. In spite of the price for the services rendered by the expert agency having been paid by the buyer, the value thereof is liable to be added to the value of the imported goods for determining the transaction value. In the case at hand it is nobody s case that the buyer had supplied any goods or services free of charge or at reduced cost for use in connection with the production and sale for export of imported goods. All the exercise done by the Tribunal in scrutinizing the documents forming....
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....ant legal provision is contained in Rule 9(1)(b)(iv). That rule reads as covers : - Engineering, development, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods; 8. A perusal of this rule makes it clear that for adding engineering....... Design work etc. , it is a condition that the work in question should be undertaken elsewhere than in India and should be necessary for the production of the imported goods. In the present case no evidence has been brought on record by the Revenue that the engineering designs were undertaken elsewhere than in India i.e. by M/s. Atochem and was necessary and used for the production of the imported goods. In fact, in terms of the collaboration agreement, M/s. Atochem was to supply only basic engineering design package for the plant. The details of the engineering design package are listed in Annexure 2 to the agreement. The items listed in this annexure are description of process, process flowsheet, material balance, list of equipments, equipment specification sheets etc. and not the items mentioned in the rule. The detailed drawings were made in India by M/s. ....
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....g package supplied by the joint venture partner was not what was necessary for the manufacture of the equipment and what was necessary was undertaken in India . (e) The Tribunal in the case of Andhra Petrochemicals Ltd. considered the scope of Rule 4 read with Rule 9 (1) (b) (iv) of CVR, 1988 and held as under : 2. APL had entered into agreements with M/s. Davy Mekee (London) Ltd., UK (hereinafter referred to as `DML ), for supply of equipment and materials, for technical know-how and for servicing of the plant proposed to be erected by them at Vizag in Andhra Pradesh, for the manufacture of Oxo- alcohols. . .. 8. DML had developed design and engineering and got the capital equipment manufactured by other manufacturers. DML developed design and engineering and they were not the manufacturer. The manufacturers based in UK, Italy and West Germany manufactured the equipment as per the design/ engineering developed by DML, and they sent the finished products to DML, who in turn invoiced them to APL. In these invoices the manufacturing cost and the profit margin of the manufacturers and the procurement/handling charges of DML were included. 9. The invoice price did not, h....
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.... The Tribunal in the decision dated 31.12.2004 in the case of Indo-Gulf Corporation Ltd. considered the issue of inclusion of licence fees and basic engineering fees paid by the assessee to the overseas supplier in terms of Rule 9 (1) (c) and held as under : 6.10 Rule 9(1)(c) can be invoked only when both the conditions are satisfied cumulatively and simultaneously as (a) Reading of Rule 9(1)(c) of Customs Valuation Rules, 1988 reveal that Rule 9(1)(c) can be invoked only if the following conditions are satisfied cumulatively and simultaneously: (i) licence fees is relatable to the imported goods; and (ii) licence fees is a condition of the sale of the imported goods. Even if any of the above conditions is not fulfilled, then Rule 9(l)(c) cannot be invoked. Consequently, the licence fees paid by the importer-buyer cannot be included in the value of the capital goods. The Capital goods as imported from Outokumpu, as listed herein above are standard goods, otherwise available as off-the-shelf capital goods They are not proved to or alleged to be otherwise. These capital goods, are offered for sale by others. Therefore, Licence Fees in this case do not relate to importe....
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....EEP has nothing to do with the design or engineering of the individual component. Similarly, since the licence fee brought about the right to use the process in India and gave technical information in the form of FEEP, by itself was not the basis on which the goods were manufactured as they provided only a base for which a further engineering was to be carried out. Therefore the provisions of Rule 9(1)(b)(iv) will not apply in relation to the licence fee in question as they are not related to the goods. As to the issue whether or not the value of the information in the FEEP should be included in the assessable value of the imported equipment under Rule 9(1)(b)(iv), reference was drawn to the lucid elucidation in the Commentary on the GATT Customs Valuation Code by Sherman & Glashoff edition as under : Detailed specifications, including various dimensions noted on a drawing of the machine, are included in the buyer s order, so as to advise the exporter/manufacturer of what the buyer needs. The cost of engineering and drawing are not part of customs value, even if under taken outside the country to which the machine is shipped, to the extent that they are an appropriate way of ord....
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.... a condition of sale. Assessment of customs duty must have a direct nexus with the value of goods which was payable at the time of importation. If any amount is to be paid after the importation of the goods is complete, inter alia by way of transfer of licence or technical knowhow for the purpose of setting up of a plant from the machinery imported or running thereof, the same would not be computed for the said purpose. Any amount paid for post-importation service or activity, would not, therefore, come within the purview of determination of assessable value of the imported goods so as to enable the authorities to levy customs duty or otherwise. The Rules have been framed for the purpose of carrying out the provisions of the Act. The wordings of Sections 14 and 14(1A) are clear and explicit. The Rules and the Act, therefore, must be construed, having regard to the basic principles of interpretation in mind. . . 13. No part of the knowhow fee was to be incurred by the respondent herein either for the purpose of fabrication of the plant and machinery or for any design in respect whereof M/s. Samsung held the patent right. .. . .. 21. We cannot, therefore, accept the conte....
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....t and an amount payable in respect of the matters governing the manufacturing activities, which may not have anything to do with the import of the capital goods. 32. Article 4 provided for additional assistance in respect of the matters specifically laid down therein. Technical assistance fees have a direct nexus with the post-import activities and not with importation of goods. (j) The Tribunal s decision dated 26.10.2007 in the case of Birla Perucchini Ltd. considered the addition of value towards technical know-how in terms of Rule 9 (1) (b) (iv) and Rule 9 (1) (e) held as under: 5. The adjudicating authority has relied upon clause 2.2(i) of the agreement to hold that the supplier had undertaken detailed engineering and design of equipment supplied and thus the costs and consideration payable to the supplier under the agreement is relatable to the capital goods imported by the appellant from the related supplier. The Commissioner (Appeals) however, held that plant and machinery, spares etc. could be sold to the appellant only after accepting the purchase of technical know-how without which the factory of the appellant could neither be erected nor function qualitatively.....
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....tion agreement that the foreign supplier would arrange to supply plant & machinery and equipments only if the appellants required, which would mean that the appellants were free to procure capital goods required for setting up of its plant in India from any other supplier either in India or abroad. The contention of the ld. SDR that payment of fee was a condition of sale of the imported capital goods for the reason that the foreign supplier ensured that the precision casting is to be produced in India would be of internationally acceptable quality and the appellants therefore, could not have purchased the capital goods from any other supplier cannot be accepted in the light of clause 4.2.1 of the agreement. The decision of the Tribunal in Otto India Pvt. Ltd. v. CC, Kolkata - 2002 (149) E.L.T. 477 (Tri.- Kolkata), upheld by the Apex Court in 2003 (158) E.L.T. A331 (S.C.), (cited by ld. SDR) wherein it was held that the equipment was imported from the foreign collaborator to obtain performance guarantee in absence of which the importer would not get the contract from their buyers or the importer (cited by the ld. SDR) is distinguishable on facts as Otto India Pvt. Ltd. was obliged t....
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....well as on law. [Emphasis supplied] (l) Hon ble Supreme Court in their decision dated 21.2.2008 in the case of Commissioner of Customs vs. Ferodo India Pvt. Ltd. dealt with the issue of invocation of Rule 9 (1) (c) and Rule 9 (1) (e) and held as under : 6. At the outset, it may be stated that, this is not the case of rejection of transaction value, though it is held to be a related party transaction. In this matter we are concerned with adjustment/addition to the price of the imported goods under Rule 9(1)(c) or in the alternative under Rule 9(l)(e). .. . Role of Interpretative Notes to CVR, 1988 13. At the outset, it may be stated that Rule 9(1)(c) has to be read with the Interpretative Notes and when so read it authorises the Customs to add the royalties/licence fees to the assessable value only in certain conditions, namely, when the royalties/licence fees are related to imported goods; that, when the buyer is required to pay to the seller, directly or indirectly, as the condition of the sale of the goods being valued, such royalties and licence fees are not included in the transaction value. 14. One more significance of the Interpretative Notes is that it h....
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.... for use in connection with the production and sale for export of imported goods requires to be added to arrive at the transaction value as per Rule 9(1)(b). In particular, the value, of engineering, development, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods requires to be added. (c) The Rule permits inclusion of only engineering drawing, design etc. necessary for the production of the imported goods . Rule does not envisage remote connection between engineering drawing, design etc and the imported goods . The gap between Basic Engineering Drawings and detailed drawing is vast. The one provides all the detailed inputs for undertaking manufacture. The other merely indicates the lay out, relative size etc. From the size specifications alone construction of engineering equipment is not feasible. Telling the manufacturer, the specification of what is being ordered is only in the nature of buyers assist. Cost incurred towards buyers assist cannot be included in the value of imported goods. (d) When the technical know-how and engineering services are not related to the equipment designs but ar....
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....nts earlier issued Notice Inviting Tender dated 25-6-97 . (d) Thereafter, the appellants have entered into 3 contracts/agreements. The first contract was with UOP-IA, for licence to use the process, engineering and design. The second agreement -No. 9802.01 was with a consortium of industries (TOYO, MITSUI and MITSUBISHI) referred to as Supplier for supply of equipment and machinery. The third agreement - No. 9802.02 was with the same consortium but called FEC, for off-shore design and engineering. (e) The overall value of the contract for supply of equipment and machinery remained fixed but the value of individual equipment / machinery was flexible. (f) The appellant-assessee imported the goods meant for CCR-2 through different ports under project import duty benefit scheme which was registered with the Mangalore Customs. The imports took place during the period September 98 to September 1999. Out of the total 66 bills of entry, only 3 bills of entry filed at Custom House, Mangalore were assessed finally and the remaining were all provisionally assessed. 12.2. The relevant facts, which emerge from a careful reading of the agreements, are as follows: ....
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....n/drawings/specifications carried out by the Supplier as well as the vendors of the Supplier were subject to review and approval of UOP-IA, who is the licensor. (i) The three different stages involved in preparing the design for the manufacture of the equipment are closely integrated and are necessary for the manufacture of the equipments. (j) The fabrication work of off-shore equipments could not have been taken up and completed without relying on the first two stages of design work. 13.1. According to the Department, (a) The rationale for inclusion of cost of goods and services under Rule 9 is to place the vertically integrated operations on par with split operations . Parity is ensured so that the transaction value does not get skewed on account of different practices/arrangements. (b) The expression in connection with is of wide import and there is no need for immediate nexus to vendors costs and prices. (c) The expression Engineering appearing in Rule 9 (l) (b) (iv) is also of wide import. (d) The expression necessary would mean what is indispensable, needful or essential. 13.2. According to the assessee, the Ba....
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.... The value of supply of equipments is 33.7 million US $. The amount of 6.64 million US $ is abnormally high (being about 19.7% of the value of supply of equipments) to be considered as buyers assist as claimed by the appellants. 14.6. It is also pertinent to note that the whole transaction was a package, a deal, a unified and integrated agreement for sophisticated and highly developed technology. UOP-IA s patented process involved confidential technical information, and without supply of the design and engineering of the equipment for such a patented process by UOP-IA, no unconnected manufacturer having no access to such confidential design and engineering of the equipment, could produce them. The various vendors manufactured the equipments as per the design/ engineering developed by FEC, and they sent the finished products to FEC, who in turn invoiced them to MRPL. Whether fine can be imposed under Section 125 when the goods were held not available for confiscation? 15.1. When the offending goods can be confiscated and when fine can be imposed have been considered by this Bench in detail in the case of Bharti Airtel Ltd. & Others and it has been held as under....
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....e jurisdiction of Indian Customs authorities as in the case of goods which have been illegally exported. In such a situation, the authorities may not be able to pass an order of confiscation as the same is not practicable and further the decision may not be legally enforceable. This is in line with the decision of the Tribunal in the case of Chinku Exports Vs. Commissioner [1999 (112) E.L.T.) 400] which was upheld by the Hon ble Supreme Court s decision reported as Commissioner Vs. Chinku Exports [2005 (184) E.L.T. A36 (S.C)]. 19.7. In the present case, the goods are offending in nature and they are liable to confiscation. The whereabouts of the goods are clearly known and they are within the jurisdiction of the adjudicating authority. Therefore, the order of confiscation of the entire goods including goods not seized is valid. 19.8. It is not out of place to note that Section 110 of the Customs Act envisages that, when the proper officer has reason to believe that any goods are liable to confiscation, he may seize such goods . On the other hand, the provisions related to confiscation of illegally imported goods (Section 111) are to the effect that the offending....
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....ions for procuring equipments must have been known before inviting tender. Even otherwise we have held that the amounts paid under these two agreements are too high to be considered as towards buyers assist. The fact that no such issue was raised in respect of CCR-1 is of no consequence in the context of determining the obligation of the assessee to disclose the contracts involving payments which were integrally connected to the procurement of off-shore equipments. Further, we note that all the Bills of Entry except three were provisionally assessed as required under Project Import Regulations and the same were finalized/directed to be finalized by the impugned order. In view of the above, we hold that the invocation of extended period of limitation and imposition of penalties on the appellant-assessee are justified. Whether penalty under Section 114A should be imposed equivalent to the duty demanded plus the corresponding interest accrued under Section 28AB of the said Act instead of penalties equivalent to the duty demanded ? 17. The above issue as to whether penalty under Section 114A should be imposed equivalent to the duty demanded plus the corresponding in....
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....ases, the Commissioner at the time of adjudication of the case could not have determined the actual amounts of interest to be included in penalties under Section 114A. Further Section 114A envisages penalty on the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section 8 of Section 28 . The Commissioner was not in a position to determine the interest amount at the time of passing the impugned order. Therefore, his imposing penalties equal to the duty determined is in order. 18. In view of the above, the issues framed in paragraph 7 are answered as follows : (a) ADG DRI had jurisdiction to issue the show-cause notices and the same have been validly issued. (b) The Agreements between MRPL and UOP-IA and the Agreements between MRPL and consortium of three companies are closely interlinked. The whole transactions covered by the Agreements are in the nature of a package, a deal for supply of sophisticated technology along with the equipments required for adopting the said technology. In the context of manufacture of the equipments, certain confidential information and data are required to be furnished by the Licensor t....