TaxTMI 
TaxTMI 
2016 (9) TMI 726
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....preme Court in Tata Iron & Steel Co v. Commissioner of Central Excise & Customs, Bhubaneswar [2000(116) ELT 422 (SC)] had decided that post-importation expenses were not to be included in assessable value. 2. The respondent had entered into a contract with M/s Gujarat Godrej Innovative Chemicals Ltd for execution of project to erect and commission a 'PSA Hydrogen plant' for its 'alpha olefins' facility. Allegedly, the composite contract for supply of materials and the engineering information and design and drawings in which the price agreed as a consolidated sum was deliberately segregated at the insistence of the respondent. According to Revenue, this component of the agreement, valued at US$175000, included in the assessable value by the adjudicating authority in accordance with rule 9(1)(e) of Rules supra on finding that both aspects were part of the same agreement with the supply of 'engineering information' as a condition of sale had been incorrectly overruled in the impugned order. The decision of the Hon'ble Supreme Court in Collector of Customs (Prev), Ahmedabad v. Essar Gujarat Ltd [1996 (88) ELT 609 (SC)] was also cited. 3. The issue of valuation had been examined a....
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....n payment for 'engineering drawings' and that 'engineering drawings' were intended for use in post-importation activity; that the parts imported are integral to the plant which would require 'engineering drawings' to make it functional and that rule 9(1) of Rules supra requires drawings and designs to be includible in assessable value. It is further submitted that the price of 'engineering drawings' being payable renders it imperative as per rule supra to be included in assessable value. It was also held out that the deliberate act of splitting up of the total consideration for the agreement is sufficient evidence that the supply of goods was contingent upon providing the drawings; likewise, this was allegedly reinforced by the performance warranties that mandated the operation of the plant at the stipulated efficiency. The reliance on the decision of the Honble Supreme Court in re M/s Tata Iron & Steel Co Ltd in the impugned order was sought to be assailed on the ground that it dealt with a different includible element while the disregard of the decision of the Tribunal in Otto India Pvt Ltd v. Commissioner of Customs Kolkatta [2002 (149) ELT 477 (Tri)] affirmed by the Hon'ble Su....
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....t the components of the assembly are entirely supplied from abroad or even that the parts that are indigenously procured are sourced at the instance of the overseas supplier. There is no evidence that the warranty for the efficient performance of the plant is attached also to the indigenously procured components. Having supplied the 'drawings' as well as a few valuable parts, it is only reasonable to devolve some level of responsibility on the overseas entity. We do not find in any of the records that the overseas entity has linked supply of all or some parts as condition for providing 'drawings.' It would appear that the 'drawings' relate to post-importation activity. 10. Having heard both sides and noted the facts, we are of the view that the crucial point for determination is whether the declared value of imported goods necessarily has to be subject to enhancement merely on the ground that a contract with the overseas supplier incorporates a second and distinct transaction. It would appear that the original authority has presumed that addition is mandated by Rule 9 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. 11. In Commissioner of Customs (....
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....we are concerned only with the first part of Rule 9(1)9(e). The narrow question that arises before us is whether the payment made for the technical services agreement is to be added to the value of the plant that is imported inasmuch as such payment has been made as a condition of sale of the imported plant.' From the above, it would appear that the Hon'ble Supreme Court has ruled that the situations envisaged in one or the other sub-clauses of rule 9 should be present in the import transaction for additions to be effected to the price adopted under rule 4 for assessment to duty. Consequently, it would appear that legislative intent did not envisage every declared transaction value to be subject to further adjustments merely because rule 9 is the adjustment provision moored to rule 4. This decision has taken note of Commissioner of Customs (Port), Kolkata v. JK Corporation Limited [(2007) 9 SCC 401 = 2007 (208) ELT 485 (SC)] to distinguished the judgment in re Essar Gujarat by drawing on Tata Iron & Steel Co. Ltd v. Commissioner of Central Excise & Bhubaneswar thus: '16. Reliance has been placed by Mr. Radhakrishnan on a decision of this Court in Essar Gujarat Limited (....
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....has been couched in a negative form and is accompanied by a proviso. It means that the charges or costs described in clauses (a), (b) and (c) are not to be included in the value of imported goods subject to satisfying the requirement of the proviso that the charges were distinguishable from the price actually paid or payable for the imported goods. This part of the Interpretative Note cannot be so read as to mean that those charges which are not covered in clauses (a) to (c) are available to be included in the value of the imported goods.." and noted with approval that '15 .....In an instructive passage on principle, this Court also laid down: "9. The basic principle of levy of customs duty, in view of the aforementioned provisions, is that the value of the imported goods has to be determined at the time and place of importation. The value to be determined for the imported goods would be the payment required to be made as 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 tr....