TaxTMI 
TaxTMI 
2013 (8) TMI 134
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....ow-cause notice and adjudication proceedings, impugned order has been passed. In the impugned order, the Commissioner has held that the agreements, viz. Technology Transfer and Trade Mark License Agreement dated 01.10.2001, supply agreement dated 01.10.2001 and importer agreement dated 26.09.2001 between the two companies are fraudulent and fabricated and have no relation to the real state of affairs of SAIPL. On this basis, the Commissioner decided that 45 million USD charged as Technology Transfer is attributable to pre-importation activity and, therefore, this amount has to be added and included in the assessable value, applicable to each imported car kit. Accordingly, he has confirmed a duty demand of Rs.97,15,00,054/- against SAIPL with interest as applicable. He has also imposed a penalty equal to duty under Section 114A of the Customs Act, 1962. He has also imposed a fine of Rs.10 crores in lieu of confiscation of car kits imported during the period from October, 2001 to July, 2007 under Section 111 (m) of the Customs Act, 1962. A penalty of Rs.5 crores has been imposed on Shri Imran Hassen, Ex-Managing Director of SAIPL, penalty of Rs.1 crore has been imposed on Shri Lukas ....
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....ied upon by the revenue clearly supports the case of the Appellants that technical documents did come to India. Also, Commissioner has recorded specific findings that technical documents have indeed come. 4.1 In fact, it is the claim of the Revenue that no Bill of Entry was filed nor any baggage declaration was made in respect of the technical documentation. 4.2 It is not disputed or denied by the Revenue that technical drawings, designs etc are otherwise exempt. It appears that the Government of India recognized that it is common practice to bring technical documents in the baggage and considering the ground reality. Notification No. 11/97-Cus (S.No. 84) was consciously amended vide Notification No. 23/97 dated 4 March 1997 to the effect, the technical documents like drawings are exempt even when imported in the baggage and fall under Chapter 98. 4.3 In any event, all key documents being relied upon by the Revenue themselves either contemplate or evidence receipt of technical documentation, inter alia including the following - 4.3.1 FIPB Application dated 16 September 1999 4.3.2 Certificate/letter dated 2.2.04 from Skoda Auto  ....
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....urers or auto parts manufacturers, have paid/are paying either lump sum or running or both kinds of "royalties and license fee" for obtaining permission to use of technology and know-how. This Hon'ble Tribunal has set aside any loading to assessable value for customs purposes on account of such payments. The appeals filed by Revenue before the Apex Court stand dismissed in Sl. No. (vi) to (ix) below. The list of relevant decision is as under: i. CESTAT Order No. A/290/WZB/06.C-II (G.S.T.B.) dated 30.03.2006 in the matter of M/s General Motors (I) Pvt. Ltd. ii. General Motors India Pvt. Ltd. V. CC (Imports) 2009 (235) ELT 364 (Tri.Mumbai) iii. Hyundai Motor (India) Ltd. v. CC 2007 (214) ELT 436 (Tri. Del) iv. Escorts Ltd. v. Collector of Customs 1996 (83) ELT 388 (Tribunal) v. Daewoo Motors India Ltd. v. CC 2000 (115) ELT 489 (Tribunal) vi. Collector v. Hero Honda Motors Ltd. - 1995 (80) ELT 712 vii. Collector v. Maruti Udyog - 1987 (28) ELT 390 viii. Hindustan Motors v. CC - 2005 (191) ELT 488 ix. Toyota Kirloskar Motor (P) Ltd. v. CC - 200....
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....ot contend that payment is not for technology, but price of imported goods. Reliance in this regard is placed on - i. Life Insurance Corp. of India v. Escorts Ltd. (1986) 1 SCC 264 ii. CIT v. Sriram Pistons & Rings Ltd. [1990] 181 ITR 230 (Del.) iii. Kinetic Honda Motor Ltd. v. Jt. CIT [2001] 77 ITD 230 (Del.) iv. Circular No. 6-P issued by Central Board of Direct Taxes dated 06.07.1968. 6.8 To be fair to the Revenue, in the present case, the Revenue is not suggesting that the quantum of USD 45 Million is excessive and is on a higher side. The Revenue is also not suggesting that payment of USD 45 Million amounts to diversion of portion of price of imported goods towards the value of technology. This is clear from the position that the Revenue is seeking to add entire USD 45 Million to the assessable value and not a porition of USD 45 Million to the assessable value of the imported goods. 6.9 In view of the above submissions, the Revenue's case fails in this scenario also. 7. Scenario 4 - That USD 45 million paid by Appellants to Skoda Auto a.s. under TTA dated 1 October 2001 is addable to the price of imported....
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....learly states that USD 45 million for granting license to manufacture the car in India from the technical documents provided under the said agreement. Hence, the amount of USD 45 million is for the cars manufactured in India and not related to the imported car kits/parts. 7.8 The payment of this amount is also not a condition for sale of the imported cars kits. There is no cross reference between the Supply Agreement and the TTA. Even the draft agreements did not suggest the same in any manner. The liability to pay USD 45 M is irrespective of number of car kits imported. 7.9 In fact, the terms of FIPB approval dated 2.11.1999, itself proves that lump sum is not a condition of sale of imported goods. The approval permitted payment of lump sum in the following installments:- a. 1/3rd amount when agreement is filed with RBI b. 1/3rd after delivery of technical documents. c. 1/3rd upon commencement of commercial production or 4 years after filing of agreement with RBI, whichever is earlier. 7.10 Therefore, even if commercial production had not commenced within 4 years of the filing the agreement, the technical fees still had to b....
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....hat the same may also be seen from CAS-10 "Cost Accounting Standard on Direct Expenses" issued by the Institute of Cost Accountants of India, which deals with the principles and methods of classification, measurement and assignment of Direct Expenses, for determination of the cost of product or service, and the presentation and disclosure in cost statements. The CAS-10 deals with the treatment to be accorded to direct expenses incurred on a lumpsum basis, and in fact, also recognizes that one time technical know-how fee is royalty. The said paragraph is reproduced below for ease of reference - "5.2.3 Direct Expenses paid or incurred in lump-sum or which are in the nature of 'one - time' payment, shall be amortised on the basis of the estimated output or benefit to be derived from such direct expenses. Examples: Royalty or Technical know-how fees, or drawing designing fees, are paid for which the benefit is ensued in the future period. In such case, the production / service volumes shall be estimated for the effective period and based on volume achieved during the Cost Accounting period, the charge for amortization be determined. 8.8 It is claim....
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....llants. There is no therefore nothing objectionable in the said projection made in the cost sheet or even remotely supports the contention of the revenue. 8.15 It cannot be denied that, in the cost sheet, the treatment accorded to both Euro 907/ DEM 1775 and Euro 511 / DEM 1000 is exactly the same, viz. both are shown as part of net revenue to Skoda Auto a.s. and both are also shown as part of manufacturing costs for the Appellants. 8.16 Then, going by the Revenue's method of inferring the cost sheet, all sums shown as "deducted from the amount of DEM 16,686" should be considered as payment towards price of the goods. 8.17 Further, in the present proceedings, Revenue has clearly accepted the position that the running royalty is not part of the price of the imported goods. Department has not added DEM 1000 = 6% of 16,686 = Euro 511) in the value in the present case. 8.18 Thus, it is evident that the inference drawn by the Revenue from the cost sheet is completely erroneous and perverse. 8.19 In view of judgment of this Hon'ble Tribunal, once running royalty is not added to the value, lump sum cannot be added to value of imported goods. (a) Totalfinaelf....
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....ade to FIPB, the Appellants had stated that "as per published data existing car manufacturers also seem to need such and similar kind of payment only for upgradation from their respective currently used technologies". The correctness of this statement is not disputed by any of the agencies including the Respondent in his impugned order. There is not even a suggestion that others did not pay similar amount at that time. 10. Allegation mis-declaration to SVB The department has alleged that the Appellants have not declared the correct transaction value to the SVB. This allegation is based on (i) document showing import price for Skoda Octavia at SKD00 and SKD0 levels, (ii) document showing pricing of India SKD0, Slowenien CBU and Koratien CBU and (iii) Price List at Appendix B of Supply Agreement submitted to SVB. 10.1 It is submitted that these and similar averments made and conclusions drawn in the Show Cause Notice or on behalf of the Respondent are incorrect and irrelevant to the present controversy. 10.2 In the present case, addition is being made under Rule 9. If value arrived under Rule 4 by SVB is incorrect and unacceptable for the department for any reason, they a....
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....l was affected by the irrelevant material used by it in arriving at the finding....". In the case of Hanumant Cement Pvt Ltd v Union of India 2002 (143) ELT 263 (Del.) 10.10 It is submitted that the Department has referred to the following judicial decisions to support its contention that USD 45 million paid by the Appellants to Skoda Auto a.s. under the TTA is a condition to the sale of imported goods, and hence, includible in the price of imported goods under Rule 9(1)(e). (a) Matsushita Television & Audio (I) Ltd v. CC (b) T.D.T. Copper Ltd v. CC, New Delhi (c) Hitachi Koki India Ltd v. CC, Chennai (d) Continental Coffee Ltd v. CC, Chennai 10.11 Decision in case of Matsushita Television & Audio (I) Ltd supra, has no application in the present case, on facts. In Matsushita's case, the payment of running royalty was held to be a condition to the sale of imported goods on the basis that the royalty was computed on 'net factory sale price' which included, inter alia, the value of imported goods. It was on this sole basis that Supreme Court decided against the assessee. This judgment has been distinguished in Ferod....
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....he assessable value. The present show cause wants to do so. Such a course amounts to change in interpretation by department and cannot be covered by proviso to Section 28. 11.4 In the event this Hon'ble Tribunal holds that the TTA dated 1 October 2001 is the genuine agreement and payment of USD 45 million made thereunder is a condition for import of car kits and hence, addable under Rule 9(1)(e), it is submitted that the SVB examined the said TTA and recorded a specific finding that payment of USD 45 million is not relatable to the goods imported from Skoda Auto a.s. and is relatable to transfer of technology for assembly and manufacture of contractual products, and that there is no requirement to make any adjustments to the price of the goods being imported under provisions of Rule 9 of the Customs Valuation Rules. Hence, the demand would clearly be barred on grounds of limitation. Alternate submissions on applicability of proviso to Section 28 12. Let us assume for the sake of argument that full facts were not known to the SVB when the order was passed in June 2003. 12.1 However, admittedly, the assessments of imports from 2001 were provisional. The SVB passed a speak....
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.... taken over by DGCEI on 21.09.2004, much before the finalization of Bills of entry on 25.03.2005 /11.04.2005. Therefore, proviso to Section 28 cannot be invoked on this ground. 12.10. It is true that the purported cost sheet and two sheets from the transfer pricing file were taken only on 17.08.2006. However, by September 2004 itself, major documents which form the basis of the present Show Cause Notice were taken over by the department. Hence, the additional documents resumed on 17.08.2006 cannot enable the department to invoke proviso, since practically the entire material from which adverse inference is being drawn is available to the department on 21.09.2004. 12.11 Even otherwise, according to the department, it is the cost sheet which shows that the technology fee is USD 1000 per car. The show cause notice makes the same averment from the application dated 16.09.1999 filed with FIPB. This application dated 16.09.1999 is part of record resumed on 29.05.2004. Hence, inference sought to drawn from the cost sheet is already the inference drawn by the department from the FIPB application dated 16.09.1999. Hence, discovery of cost sheet on 17.08.2006 cannot be a ground to invo....
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....ubmission of the Appellants is that once the documents based on which the inference is drawn is in possession of the Respondent, no suppression can be alleged post 20 September 2004. 12.17 In this regard, the Appellants place reliance on the following judicial precedents - (a) Decision of the Hon'ble Supreme Court in Modipon Fibre Company v. Commisisoner of Central Excise 1974 (94) ELT 8 (b) Decision of this Hon'ble Tribunal in Vishwa Industrial Works, Bombay v. Collector of Central Excise, Bombay 1987 (31) ELT 976. 13. Redemption fine in lieu of confiscation 13.1 It is submitted that there is no cause for confiscation of the goods imported by the Appellants under Section 111(m) of the Customs Act. 13.2 It is submitted that in any event, since, by own admission of the Respondent, no goods are available for confiscation, the questions of confiscation and/ or imposition of redemption fine do not arise. Admittedly no goods are seized and no bond is executed by the Appellants for provisional release of the goods. 13.3 It is submitted that the Larger bench of this Hon'ble Appellate Tribunal at Mumbai in the case of Shiv Kripa Ispat Pvt Ltd ....
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.... During the course of the hearings, the Learned Consultant, on behalf of the Respondent, accepted before this Hon'ble Tribunal that the demand on more than 45,000 cars and on any amount more than USD 45 million cannot sustain and can be set aside. 17. Submission on behalf of Pricewatehouse Coopers Pvt. Ltd. by V. Sridharan, learned Sr. Advocate. 17.1 On 16.09.1999, Skoda Auto A.S. made an application to the Foreign Investment Promotion Board for permission to commence operations in India. On 02.11.1999, the Department of Industrial Policy and Promotion ("DIPP") granted approval to the Application of Skoda Auto A.S. to establish a wholly owned subsidiary for manufacture/assembly of cars in India. 17.2 Pursuant to the approval of Government of India, there was a meeting of the Board of Directors of Skoda Auto India Private Ltd. ("SAIPL") held on 04.07.2000 and it was agreed therein that a set of the following 5 draft agreements between SAIPL & Skoda Auto A.S. were to be sent to the Appellants for review prior to execution: a. Technology Transfer Agreement ("TTA") b. Importer Contract c. Contract for assembly work  ....
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....on 92 of Finance (No.2) Act, 2009 which seeks to cure this defect is not so successful. A.1 Notification 31/2000-Cus (NT) dated 09.05.2000 appointed officers of the DGCEI as officers of customs. This notification however does not specify the area in which they can exercise jurisdiction. A.2 The revenue contended in the absence of the same, they can exercise jurisdiction all over India. This very contention has been rejected by CESTAT, Chennai in following two decisions: (i) C.K. Geever v. CC (Seaports-Imports), Chennai 2009 (235) ELT 304 (Tri. - Chennai) (ii) Swami Fashions (P) Ltd. v. CC 2009 (239) ELT 149 (Tri.-Chennai) A.3 Notifications 27/2009-Cus dated 17.03.2009 superseded Notification No. 31/2000-Customs (NT) dated 09.05.2000 "except as respect things done or omitted to be done before such suppression". This notification gave all India jurisdiction to officers of DGCEI. This notification is prospective. The show cause is issued in the present case prior to this date and hence notification dated 17.03.2009 is not relevant. A.4 Vide Se....
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....come into force retrospectively. C.2 The entire Section 92 relates to matter of jurisdiction. It is not a provision otherwise creating the substantive liability. Still, the Explanation thereto has been enacted and in these terms by the Parliament. Therefore, in view of the Explanation, no penalty is imposable. C.3 In Shaw Wallace Co. Ltd. v. CCE - 2003 (156) ELT 406 (Tri-.Del), the amendment involved sought to overcome the Cotspun's decision of Supreme Court and resorted the power to demand duty under Section 11A despite approved classification list and price list. Amendment carried out therein contained on explanation similar to Explanation to Section 92. Assessee relied upon this explanation and prayed for deletion of penalty CESTAT accepted this submission. There is also, amendment related to a procedural matter. Hence, no penalty is imposable in the present case. C.4 In Standard & Chartered Bank - 2006 (197) ELT 18, the Supreme Court has held that offences are not confined to criminal proceedings only. It is a transgression of the law and need not be restricted to criminal proceedings. Further, the Hon'ble Court held that punishme....
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.... of the minutes makes it apparently clear that the documents approved by the Board were not final / executed agreements. They are the un-finalized drafts requiring further examination. PwC was to vet the same for compliance with Indian laws, to comply with the suggestion of Ms. Ohlidalova as per Point 4 of the Minutes. Also, compliance with Czech law and Skoda Auto internal guidelines for all the agreements had also to be confirmed. E.4 Therefore, the assumption that the real TTA was executed in July 2000 is entirely conjectural and an impossible inference. E.5 The minutes of the meeting dated 09.12.2002 between SAIPL and PwC also does not advance the case of the department that the present appellants had abetted in the alleged duty evasion by SAIPL. E.6 It is pointed out that the Appellants simply instructed SAIPL to comply with the statutory requirements (Paras 5- 10 of the minutes). By no stretch of imagination can the above advice on legal compliance be construed as "abetment" of evasion of customs duty. E.7 At no point of time, were the Appellants called upon by the Respondents to explain the alleged acts by the d....
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....rious statutory authorities in India. G.2 There is no admission by anybody to the effect that the agreement dated 1.10.01 or for the matter, other agreements were fabricated or bogus. No statement has been recorded from SAIPL or from the appellants. G.3 The case of the department is that technical fees is includible in the value of the imported car kits, in terms of Rule 9(1)(c) or under Rule 9(1)(e). That being the case, the department itself is of the view that the technical fees paid by SAIPL Skoda related to license fee, paid as a condition for sale of the car kits. This itself shows that the department is no doubting the nature of payment of USD 45 million, towards license fees. G.4 Further, the decisions of the CESTAT and Supreme Court are to the effect that the licence fees paid for obtaining know how for manufacture of the car in India is not includible in the value of the imported goods and that every competitor of the assessee-SAIPL have not paid customs duty on the technical know-how fees, there was no necessity for any one to fabricate the agreements, as alleged in the impugned order. 20. On behalf of the Revenue, Shri.....
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....e Calculation SKD-O" This cost sheet which is in German language was found during the search of the premises of SAIPL. This was translated into English by the Managing Director, Mr. Lukas Folc. At the end of this cost sheet, there is a File No. ECC-4/SV, SKD-Octavia-3-01-MIN EB per 228 Ks, OE India O-29/08/2001. This File no. clearly shows that it originated from the EC Department i.e., Controlling Department of SKODA which is incharge department of the prices and contractual conditions of the dispatches to SAIPL. A copy of the cost sheet is submitted herewith as Annexure-'A' for favour of perusal. 22.3 In the cost sheet SKODA has worked out the individual costs of the car kit ex-Mumbai as under: Material Cost 13171 DEM Specifications 01614 DEM FPK 00421 DEM SEB 00496 DEM Transport/ 01272 DEM Packaging/ Insurance/ Dis-assembly GWL 00013 DEM Individual cost of SKODA / car kit is Coming to: 16988 DEM 22.4 The net revenue of SKODA for its transaction with SAIPL on the sale of this car ....
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....ransfer pricing file shows the comparative pricing details of Skoda car kits for India SKD0, Slowenien CBU and Kroatien CBU. 23. Perusal of above documents when compared with Itemized Price List at Appendix B, (Pg 555/PB-4), will show that Itemized Price List is altogether different from the pricing pattern of SKODA as reflected in Annexures 'A' & 'B' above. It may be mentioned here that the Price List at Appendix 'B' was submitted to the Special Valuation Branch. According to the Revenue, this Price List is a fabricated Price List based on which the clearance was obtained. 24. Import of Technical Documentation vis-à-vis Import of Car Kits in SKD and CKD condition It is claimed that the import of technical documentation and import of car kits are two separate transactions. Lumpsum fee of USD 45 millions has no relation to the price of the goods imported. If so, it does not stand to reason why then the lumpsum amount of Euro 907 (i.e. USD 1000 per car kit) has been added to the value of the goods imported to arrive at the landed cost after clearance of the same. There is no plausible answer to this. It is, therefore, quite evident that the import of car kits and the ....
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....e adjudicating authority had not examined the pricing arrangement between the foreign collaborator and the buyer. It has only examined the royalty/TAA. 20. Be that as it may, in the present case, on reading TAA we find that the payments of royalty/licence fees was entirely relatable to the manufacture of brake liners and brake pads (licensed products). The said payments were in no way related to the imported items. In the present case, no effort was made by the Department to examine the pricing arrangement. No effort was made by the Department to ascertain whether there exists a price adjustment between cost incurred by the buyer on account of royalty/licence fees payments and the price paid for imported items. No effort was made by the Department to ascertain enhancement of royalty/licence fees by reducing the price of the imported items. In the circumstances, we find no infirmity in the impugned judgment of the Tribunal. In this case, the Department has gone by TAA alone. On reading TAA in entirety, we are of the view that there was no nexus between royalty/licence fees payable for the know-how and the goods imported for the manufacture of licensed products. The D....
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....wing discussions: 31. Indo Gulf Corporation Ltd. V/s. CC, Mumbai 31.1 In this case, besides import of various capital goods from Outokumpu, the appellant had also imported various capital goods from other sources under Project Import. The dispute in this case was whether license fees and engineering fees paid by the appellant to Outokumpu were includable in the value of capital goods imported. When the matter was ultimately taken to the Tribunal, the Tribunal found that Rule 9(1)(e) was not invoked in the original proceedings. Hence it was held that the said Rule cannot be invoked at this stage. It was further held that if it is the case of the Department that the basic engineering fees are includible by virtue of Rule 9(1)(b)(iv), then Rule 9(1)(e) cannot be invoked simultaneously. Needless to say that facts of this case are quite different from the facts of the case in hand where only Rule 9(1)(e) has been invoked to include lump sum fee in the value of the goods imported. Therefore, this case has no application to the facts of the present case. In this connection, it is important to note that each case depends on its own facts. Even one additional or different fact may mak....
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....ds and not to the raw materials imported. He, however, held that lump sum fee was includible in the assessable value of the goods inasmuch as without the technical know-how, manufacture of finished goods was not possible. In appeal, the Tribunal reversed the order of the Commissioner (Appeals) holding that the appellant was free to purchase the raw material from any source other than its collaborator. Moreover, there was no condition in the sale agreement that the raw materials will not be sold to the appellant unless and until the technical know how was procured from its collaborator and royalty was also paid on the finished goods. In these circumstances, the Tribunal held that the two elements cannot be treated differently as has been done by the Commissioner (Appeals). 32.3 Daikin Shriram Air Conditioning Pvt. Ltd. V/s. CC, Mumbai: Referring to Hon'ble Apex Court decision in WEP Peripherals Ltd. V/s. CC, Chennai - 2008 (224) ELT 30 (S.C.), ld. Sr. counsel pointed out that the Tribunal's decision in Daikin's case has been reversed by the Hon'ble Apex Court in light of its judgment in the case of CC V/s. M/s. Ferodo India Pvt. Ltd. It is submitted that the Apex Court's decis....
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...., video tapes, Information System et. SAIPL has not spelt out in what form the technical documentation has been imported. It has already been mentioned herein above that no baggage declaration nor any Bill of Entry was filed for its importation. Be that as it may, separate assessment of the technical documentation is ruled out in view of the specific allegation which has been sustained by the Commissioner that the lumpsum of USD 45 million has been remitted in the guise of technology transfer fees. This sum actually forms an integral part of the price of the cars imported in SKD & CKD condition. In view of this, the technical documentation, whether imported in the form of printed books or in the form of plans, drawings & designs carrying 'nil' rate of duty is of no consequence. 33.3 In this connection, a few of the Articles from the Supply Agreement may also be seen: Article 2.1 reads as follows: Pursuant to and in accordance with the terms of this Agreement, SKODA hereby agrees to provide and deliver SKD Deliveries to SAIPL. Pursuant to the terms of this Agreement SAIPL agrees to (i) Order and accept SKD deliveries from SKODA; (ii) accep....
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....e notice seeks to add lumpsum payment of USD 45 million on account of technical documentation to the value of the goods imported and not royalty inasmuch as the royalties relate to finished goods manufactured and sold in India or exported out. This is very clear from the Technology Transfer and Trademark Licence Agreement vide Article 9.1. However, ld. Sr. Counsel for the appellant contended that the royalty and lumpsum payment are one and the same and in support of his contention, he relied upon various case laws including the dictionary meanings of royalties. This contention has also been repeated and elaborated in the written submissions. This contention is bereft of any merit and substance for the reasons sated herein below: (i) The Technology Transfer & Trademark Licence Agreement has mentioned two expressions, namely, lumpsum amount for the technological fees and royalties at specified rates on the sale of finished goods in India and export out of India. (ii) Rule 9(1)(c) of the Customs Valuation Rules, 1988 does not equate royalty and licence fee. If royalties and licence fee are one and the same, the then rule makers would not have used the t....
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....uired only to give interpretation of the same and apply the same to the facts of the present case." 34.2 The ratio of the above judgment is squarely applicable to the case in hand. 34.3 If the contention of the appellant that lumpsum amount of USD45 million paid towards technology transfer fees is nothing but royalty is to be accepted then in that event, the royalty would be addable to the value of the imported goods in view of the judgment of the Hon'ble Apex Court in the case of Matsushita Television & Audio (I) Ltd. V/s. CC- 2007 (211) ELT 200 (S.C). In para 7 of this judgment the hon'ble Apex Court has held as follows: "7. The question which arises for consideration in this civil appeal is: whether royalty payment was connected with the imported components. Under Rule 9(1)(c) of the Valuation Rules, 1988, only such royalty which is relatable to the imported goods and which is a condition of sale of such goods alone could be added to the declared price. However, in the present case, payment of continuing royalty was payable at the rate of 3% of the net ex-factory sale price of the colour T.V. exclusive of taxes, freight and insurance but including the cost ....
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....document with the Customs. In December, 2002 in a meeting between Shri Sunil Rekhi of SAIPL & the representatives of PWC, SIPL was advised to bring technical documentation through proper channel by observing the Customs Laws. Despite that, SAIPL continued to do so till 2004 in deliberate defiance of law obviously to avoid any detection by Customs that there is nexus between the invoice value and the payment of USD 45 million towards the so-called technical documentation. It is, therefore, a clear case of suppression of fact attracting the extended period of limitation. It has been contended that the DGCEI Officers had visited the factory of SAIPL on 21/9/2004 and practically all the documents relied upon in the impugned show cause notice and the impugned order were known to them, Hence, extended period of limitation is not applicable to this case. This contention is bereft of any substance. The notice is to be issued either within the normal period or within the extended period from the relevant date. The relevant date has been prescribed in 34.6 Section 28(3) of the Customs Act, 1962. The date of knowledge o the part of the Department is not the relevant date prescribed under S....
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....of technical documentation. Therefore, the Commissioner has rightly imposed penalty of SAIPL under Section114A of the said Act. 35. Heard the parties in detail and perused their written submissions, case law and records. 36 The undisputed facts are that the appellant is a 100% subsidiary of SACR. Therefore, the appellants are related person of SKODA under Rule 2(2) of the Customs Valuation Rules, 1988. The goods imported by the appellant from SKODA are SKD/CKD deliveries i.e. sets of disassembled vehicles or parts thereof. The period of import is October, 2001 to July 2007. The appellant is not free to procure the impugned goods from any other source unless approved by SKODA and the appellant did not file any Bill of Entry or any Baggage Declaration for import of technical documentation. 37. The main issue before us is that whether the payment of lump sum of USD 45 million made to SKODA towards technological fees for manufacturing 45,000 car kits calculated on the basis of USD1,000 per unit as per FIPB application 16.09.1999 and as per cost sheet recovered during the investigation is includable in the assessable value or not. 38. The contention of the learned Counsel is....
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.... that Rule 9 is a residuary Rule. In this case the adjudicating authority has held that the declared transaction value does not reflect the true transaction value. He has held that the lump sum amount of USD 45 million paid for technical documentation is required to be included in the assessable value of the impugned goods in terms of Rule 4(1) read with Rule 9(1)(e) of the Customs Valuation Rules, 1988. The arguments of the learned Counsel is that this lump sum payment for technical documentation is a royalty and the royalty could be added under Rule 9(1)(c) of the Customs Valuation Rules. We are not convinced with the argument advanced by the learned Counsel. In this case the issue before us is that whether the lump sum payment paid by the appellant to M/s SKODA Auto a.s. on account of technical transfer documentation is a condition of sale of the impugned goods or not. Therefore, the case law relied upon by the learned Counsel that lump sum payment on account of royalty is not includable in the assessable value are not relevant to the facts of this case. 42. We find that the appellant applied to FIPB seeking approval for setting up of facilities to manufacture Skoda Brand car....
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....d the aid fact has been emerged in the cost sheet in the cost sheets also where this amount of US D 1000 has been shown as lump sum payment. For better appreciation details of the work sheets are indicated here-in-under. 44. From this work sheet for working out the landed costs of the car kits in India an element of technical licence fees amounting to 1419 Euros is added to the CIF value of the imported car kits after addition of customs duty payable. A sum of 1418 Euros is added to the CIF value of the imported car kits after addition of the customs duty payable. This 1481 Euros is the sum of 907 Euros as lump sum and 511 Euros as Technical consultation, both forming constituent of the Technology Transfer Agreement. This Euro 907 is equal to DEM 1775 which is further equal to USD 1000. It is claimed by the appellant that the import of technical documentation and import of car kits are two separate transactions. Lump sum fee of USD45 millions has no relation to the price of the goods imported. It so, it does not stand to reason why then the lump sum amount of Euro 907 i.e. USD 1000 per car kit has been added to the value of the goods imported to arrive at the landed cost after t....
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....and drive, increasing the ground clearance, improvement of fuel pumps to perform with low fuel stands available in India. We further find that in the case of vehicles exported to Malta by SACR, the vehicles were right hand drive only. Therefore, it appears nobody was clear, as to what exactly is part of TTA and what is not. 46. The appellants have not been consistent with regard to the exact nature of different components of TTA. Further, the list of technical documentation received shows that the technical documentation continues to be received till 2007, whereas in the letter of SACR to the appellants dated 02.02.2004, the entire technical documentation under TTA had been provided before the date. This also supports the case of Revenue. 47. From the records we find that pricing structure of Skoda car for India and Slovenian CBU, Croation CBU is entirely different. We further find that if SKD/CKD car kits were to be imported to India on cost plus basis and if profits were to be equivalent to normal profits mady by SACR, the additional amount to be added would have come to around 1000 USD. It would be required a cost account to work out correct amount and if that were to be a....
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....section (1) of section 4 before the 6 th 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." The amendment being retrospective, there cannot be any further doubt that the officers of the Directorate General of Central Excise Intelligence had always the power of assessment under section 17 of the Customs Act,1962 and as per the Board's Circular No. 44/2011-Cus dtd. 23/09/2011. 51. With regard to PWC we find that they have only tendered advice in terms of their understanding of the law. There is no evidence to show that PWC advised the appellant that by modifying the contract they need not have to pay customs duty of 1000 USD. There is also no evidence to show that PWC had deliberately planned or assisted in planning to ensure that under valuation is successful. The contribution of PWC seems to be vetting the agreement and ensure that the agreements are in terms of the law of the land. In the absence of their knowledge of imports made and under valuation of imports, therefore the penalty on PWC is not imposable. 52. To conc....