TaxTMI 
TaxTMI 
2014 (11) TMI 612
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....'agreement of design, engineering and equipment for 60 m2 sinter plant' was entered into for the following purposes according to the agreement. A. The buyer is desirous of appointing the seller for providing the design and details engineering, complete equipment supply and technical services with the agreed Batter Limit for installing 1*60 m2 Linear Sinter Plant with capacity of 6,00,000 TPA (Based on 330 annual operating days) for the proposed plant at Durgapur (W.B.) in India; B. Seller agrees to provide design, detail engineering, complete equipment supply and technical services to the buyer within the agreed Battery Limit. As per the agreement, according to the appellants, the equipment related to sinter plant were imported and civil....
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....for design, engineering fee and that should be added to the assessable value. On a letter issued by the Deputy Commissioner of Customs, which sought further details in respect of import of the first consignment and also the second consignment, the appellants gave details submitting a copy of the contract and thereafter the appellants also paid the duty on the design and engineering charges received by them as well as the advance paid by them. Thereafter, provisional assessment was resorted to and finally after clearance of all the consignments, proceedings were initiated which has culminated in confirmation of duty demand for the advance paid by the appellants separately without reflecting in any of the invoices during the course of clearan....
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.... notice and without any dispute. He submits that the amount was paid before the imports took place and therefore while filing the bill of entry and submitting the documents this got left out. It has to be noted that the appellants never concealed any fact from the Department and as soon as they were asked to furnish documents, they submitted all the documents such as contracts and detailed agreements, etc. when the documents were received, the department objected that design and engineering charges also should suffer duty and this was also paid by them with interest and it is the appellants submission that appellants did not even wait for all the clearances to take place even though the design and engineering charges were being paid in in....
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....4. It is also stated in Article 3.1.1 that the engineering, design fee with knowhow and patented technologies usage charges on the basis of sellers scope of engineering design for sinter plant shall be fixed price of US $ 3,67,136. This shows very clearly that contrary to the claims of the appellants that design and engineering part was exclusively related to post importation activity of erection, commissioning and installation of sinter plant. In reality, the total contract value included the engineering design fee, technical knowhow, technology usage charges and also engineering design of sinter plant itself. Further, in Appendix-II wherein the 'seller's scope of supply' has been explained, it is seen that under the head 'basic design', ....
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....so the situation is similar to the one under consideration by the Hon'ble Supreme Court, no segregation of supervision cost, local material cost, local engineering cost have been made. At the same time, there is also no indication that the design and engineering cost does not include the basic design and engineering, cost of the equipment supplied. Prima facie, we do not find any merit. 6. As regards technical supervision also, the nature of technical supervision has not been given clearly and even otherwise it is part of design and engineering cost and therefore we do not propose that this can be excluded. Further, it has also been noted that, in our opinion, in this case, it can be said that design and engineering charges have to constit....