2015 (12) TMI 1201
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..... The goods were allowed for clearance at concessional rate of payment of duty. The imported capital goods were used by the appellant for setting up of plant for manufacture of Spray Dried Instant Coffee as per the obligation of EPCU Licence. Based on the intelligence that appellant (CCL) has not declared that the suppler is related and also not declared before Customs the payment made towards technical knowhow. After completing the investigation, the DRI issued SCN dt. 22.9.99 for including the Technical Knowhow fee of US$ 288000 towards assessable value and also invoked extend period of limitation under Section 28 (1) for demanding differential duty and also proposed for penalty. The Chief Commissioner of Customs, Chennai adjudicated the case and held that US$ 1,30,000 being part of lump sum know-how payment is addable to the value of imported equipment under rule 9 (1) (b) (iv) and Rule 9 (1) (c) of Customs Valuation Rules, 1988 and confirmed the differential duty of Rs. 15,38,062/- and also imposed equivalent penalty. The adjudicating authority has also ordered for confiscation of the goods under Section 111 (m). Since the goods were not available, he impose....
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....issue relating to provisional assessment. The assessee will be entitled to canvass all the issues on merits. No costs. Consequently, M.P.No.2 of 2006 is closed." 3. Ld. Advocate appearing for the appellant reiterated the grounds of appeal. On the preliminary issue, regarding the scope of remand, he submits the Honble High Court order clearly stated that assessee-appellants are entitled to canvass all the issue on merits. He submits that period involved in the present appeal relates September 1994 to March 1995. The total value of the goods including technical knowhow is Rs. 5.50 crores. He drew our attention to SCN dt.22.9.95 at paras 9,10, and 11 of the notice. The entire allegation in the SCN is that both the supplier and the appellants are related parties and the imported goods were sold at preferred customers price. Therefore technical knowhow fee should be included. He referred to para-27 of the OIO where the adjudicating authority clearly held that supplier is holding only 5.46% of the equity of the appellant company and clearly held this relationship does not influence the price. Whereas at para 32, the adjudicating authority lists out seven ....
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....ancelled. Since technical knowhow is not includible in the value the same was not declared. He submits that invoking longer period merely on the ground of non-declaration alone is not valid ground as there is no wilful suppression. 3.3. He also submits that no penalty is imposable and the adjudicating authority invoked Section 114A for imposing penalty whereas Section 114A came into effect from 28.9.96 and their period of import pertains to September 1994 to March 1995, and section 114A was not in existence. Therefore, the question of imposing penalty under section 114A does not arise. 4. On the other hand, Ld. A.R reiterated the findings of the order. He drew our attention to para-23 of the OIO where the adjudicating authority has clearly brought out that the goods imported are patented product; technical know paid for drawing and design for setting up of machinery and without these technical know, drawing and design, the machinery could not have been set up. Both are interlinked and technical know fee are directly related to imported goods. He submits that since the parties are related, the adjudicating authority correctly loaded the value and also....
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....tered Office at... Secunderabad-500 003 (hereinafter called 'CCL', which expression shall where the context so admit, include its successors in interest and assigns) of the ONE PART and BRAZILIN FOOD PROJECT COMERCIO EXPORTACAO LTDA, having its Office at ... Indonesia, which office shall transfer all the Technical Knowhow intended under this Agreement, represented by... (hereinafter called the 'BFP', ...." Whereas 'BFP' is a limited company, manufactures Food Processing Equipment and is engaged in extension of technology services for the food industry, and having experience in the field of processing coffee and 'CCL' desires to obtain technical know-how and service assistance from 'BFP'. AND WHEREAS 'BFP' has agreed with 'CCL' to supply technical know-how and service assistance to 'CCL' for setting up an Instant Coffee Plant with the operational capacity of 500 kgs/hr. (hereafter referred to as the knowhow) on the terms and conditions hereafter mentioned. ... .... .... .... CLAUSE-II DEFINITIONS 2.1 The term 'technical knowhow' means extention of detailed drawings with localization of eq....
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.... CCL for the assured qualitative and quantitative input-output specifications and yield and capacity structure of the performance of the plant and equipment for Instant Coffee Plant with the operational capacity of 500 kgs/hr. For which knowhow is supplied by 'BFP'. The input output specifications are provided in Appendix-I. Such Guarantee shall be released on satisfactory performance of the plant erected under this knowhow on completion of 12 months from the date of full satisfactory erection and commissioning of the plant or 12 months from the date of commercial production, whichever is earlier. Such satisfactory erection would be evidenced by a certificate to that effect by 'CC". ... ... ... CLAUSE-X PRICES AND PAYMENT TERMS 10. Inconsideration of Purchase of Technical knowhow, the first named party, namely, CONTIENTNTAL COFFEE LIMITED shall pay to BFP a total lump sum knowhow fee amounting to US$ 2,88,000 (United States Dollars Two Lakhs Eight Thousand Only) As evident seen from the above agreement, M/s.BFP would provide all the technical knowhow including drawing and design inspection, testing and training of staff for setting up of Instant Coffee plan....
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....ineering, Training and Technical Services Agreement related to the import of the capital goods nor was it a condition of sale and on that basis it has recorded the finding that the provisions of Rule 9(1)(b)(iv) or Rule 9(1)(c) or Rule 9(1)(e) of the aforesaid Rules would apply to the facts of the case. 6. That apart, it further finds that both the Agreements, viz., Licence Agreement as well as Basic Engineering, Training and Technical Services Agreement, pertained to the services that were to be provided post import of the aforesaid goods. On this ground also, the value of these services could not have been loaded into the value of the goods at which those were imported. 7. It is also to be borne in mind that the respondent had purchased various capital components from many other parties and the goods for which the agreement was signed with OEC constituted only 16% of the total value. On these facts, we are of the opinion that the matter is squarely covered by the recent judgment of this Court in Commissioner of Customs, Ahmedabad v. M/s. Essar Steel Ltd. [Civil Appeal No. 3042 of 2004] decided on 13th April, 2015 [2015 (319) E.L.T. 202 (S.C.)]. 8. For all these reasons, we ....