TaxTMI 
TaxTMI 
2017 (4) TMI 261
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....only the inclusion of the fees. 2. The first appellate authority found that the said fees were payments on account of setting up of a plant in India for manufacture of 'truck wheels' and was purportedly consideration for project engineering, product engineering and training. As these were not found to be related to the importation of goods and was not a license fee, the impugned order did not concur with the findings of the original authority on this inclusion. 3. Revenue contends that this engineering service agreement is not limited only to plant layout and capacity study, machine design and selection, product and tooling design as well as procedures for operating and product testing on design level and it is further contended that this is 'know-how fee' which the importer was required to pay as a condition for sale of imported goods. Reliance is placed on the decision of the Hon'ble Supreme Court in re Essar Gujarat Ltd [1999 (88) ELT 609 (SC)]. 4. We have heard Learned Authorised Representative and Learned Counsel for the respondent. 5. We find that there is no evidence to support the contention that the said amount of DM6,00,000 was in the nature of technic....
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....of the plant itself. On the contrary, as has been pointed out above, the technical services agreement read as a whole is really only to successfully set up, commission and operate the plant after it has been imported into India. It is clear, therefore, that clause 9(1)(e) would not be attracted on the facts of this case and consequently the consideration for the technical services to be provided by Met Chem Canada Inc., cannot be added to the value of the equipment imported to set up the plant in India." 6. Distinguishing the decision of the Hon'ble Supreme Court relied upon by the reviewing authority, their Lordships held "12. And now to the case law. Collector of Customs (Preventive) v. Essar Gujarat Ltd. - (1997) 9 SCC 738 = 1996 (88) E.L.T 609 (S.C.), was strongly relied upon by Shri Neeraj Kaul. The said judgment related to the question whether licence fees payable should be added to the invoice value of a plant that was imported into India on an as is where is basis. The agreement in that case was expressly subject to two conditions, the second of which was the obtaining of a transfer of the operation licence of the plant from M/s. Midrex of the United States. The judgment....
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....e judgment in Essar Gujarat's case actually supports the respondent in that the payment for engineering and technical consultancy services in India cannot be added to the value of the imported plant. Also, in the present case, there is no transfer of technology under a license. Therefore, no question arises as to whether without such license the plant to be set up in India could be operated at all. The judgment also concludes in favour of the respondent the fact that all amounts payable for training of personnel outside India cannot be added to the value of the plant. 14. In Tata Iron & Steel Co. Ltd. v. Commissioner of Central Excise & Customs, Bhubaneswar, Orissa - (2000) 3 SCC 472 = 2000 (116) E.L.T. 422 (S.C.), a protocol had been signed between the seller and the Indian purchaser which stated that the total price will be the price for the imported equipment plus the price for engineering". The Tribunal in the said case added the amount of "engineering" to arrive at the value of the imported goods. This Court reversed the Tribunal by relying upon Rule 12 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 which reads as follows : "12. Inter....
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....s a third party which was required to be satisfied by it and the buyer (i.e. the appellant) had made any payment to the seller or to a third party in order to satisfy such an obligation. The price paid by the appellant for drawings and technical documents forming the subject-matter of contract MD 301 can by no stretch of imagination fall within the meaning of "an obligation of the seller" to a third party. There was also no payment made as a condition of sale of imported goods as such. Rule 9(1)(e) also, therefore, has no applicability. 17. So far as the Interpretative Note to Rule 4 is concerned it is no doubt true that the Interpretative Notes are part of the Rules and hence statutory. However, the question is one of their applicability. The part of the Interpretative Note to Rule 4 relied on by the Tribunal 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 Interpre....