2008 (5) TMI 5

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.... by the respondent for the preparation of designs, drawings, patterns, jigs, etc. is set aside. 2.   The respondent, a company incorporated under the provisions of the Companies Act, 1956 was manufacturing machine     tools,    their   accessories,   high    grade   castings,  pollution   control    equipments     and    other   incidental   and ancillary equipments. It owned and operated a main machine manufacturing factory at Harihar. It used to accept orders to manufacture engineering machines as per the drawings, patterns, jigs, fixtures and tools etc. developed....

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....ted January 25, 2002 giving rise to the instant appeal. 5.   This Court has heard the learned counsel for the parties at length and in great detail. This Court has also considered the documents forming part of the instant appeal. 6.   The question which arises for consideration in the instant appeal is whether the amount of Rs.43 lakhs received by the respondent towards charges for designs, drawings, tooling, jigs and fixtures etc. as per t he agreement dated May 10, 1991 could have been loaded on the value of the machine made and delivered subsequently as per the separate written orders. 7.   In order to resolve this controversy, it would be relevant to notice certain clauses of agreement dated May 10....

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....and drawings, but a total contract for design, drawing, manufacture of prototype, supply of the machines and payment of excise duty, etc. The contract could not have been read in isolation in parts, that is to say that the respondent had separately agreed to supply designs drawings etc. and also separately agreed to supply machinery. 9.   It is true that the charges for drawings, designs etc.  have to be added to the assessable value of the machines manufactured, based on use of such drawings, designs, jigs, fixtures, tooling etc. However, before adding the value of the drawings etc, it has to be established that the consideration had a nexus with the negotiated price of the assessable goods under clearance, i.e. machines ....