TaxTMI 
TaxTMI 
2022 (11) TMI 169
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....ty are concerned, these issues attained finality as there was no appeal against the order of this Tribunal by the Revenue. Paragraph 3 of the judgment of the Supreme Court is reproduced below :- "3. The only point which survives for consideration is regarding the includability of charges paid for importation of design engineering and site run in the assessable value of the fermenters. The show cause notice was based on the invokability of Rule 9 (1) (b) and Rule 9 (1) (e) readwith Rule 4. The Tribunal has not referred to either of these rules while deciding the question of includability of the charges for importation of design engineering and site run in the assessable value of the fermenters. Another point raised by the assessee was that design engineering and site run had already been assessed separately under chapter 49. The Tribunal has not decided as to what is the effect of exigibility of the design engineering and site run under Chapter 49. Since the Tribunal has failed to record a finding regarding applicability or otherwise of Rule 4, Rule 9 (1) (b), Rule 9 (1) (e) and the assessment already made of design engineering and site run under Chapter 49, we set aside th....
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....to show cause as to why the value of the design engineering and site run for Fermenter systems should not be added to the value of the machine (Fermenters) under Rule 9 read with Rule 4 of the Valuation Rules and why differential duty should not be recovered from it. Further, it was also proposed to confiscate the imported goods under Section 111 (m) of the Customs Act and penalty was proposed to be imposed under Section 112 of the Customs Act. 5. After following due process, the Commissioner has passed the impugned order including the value of the design engineering and site run to the Fermenter and ordered to recover the duty accordingly. He also confiscated the goods under Section 111 (m) and allowed them to be redeemed under Section 125 on payment of the redemption fine of Rs. 50,00,000/-. He also imposed a penalty of Rs. 25,00,000/- upon the appellant under Section 112 (a) of the Act. 6. Aggrieved, the appellant filed this appeal and the order to confiscate the goods, impose fine and penalty have been set aside by the final order of this Tribunal dated 08.11.2002 and it has not been appealed against by the Revenue. Therefore, these issues have attained finality. Further,....
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....nce at nil rate of duty under Heading 491191 and hence there cannot be another assessment of these goods including their value in the value of the fermenter. 10. Learned counsel submits that Rule 4 of the Valuation Rules provides for acceptance of the transaction value with some adjustments as per Rule 9. Of the various clauses of this Rule, 9(1) (b) (iv) and 9(1) (e) have been invoked in the SCN and the impugned order to add the value of the design engineering and site run to the value of the fermenters. Rule 9(1) (b) deals with those cases where something was supplied free of cost by the importer to the overseas supplier and requires the value of such supplies to be included in the assessable value. Sub-clause (iv) deals with the drawings and designs without which the production of the imported goods would have not been possible. Rule 9(1)(b) (iv) does not apply to their case. Firstly, there is no allegation let alone evidence that anything was supplied free of cost by the importer to the overseas supplier. The design engineering and site run are supplied by the overseas supplier to the importer. Secondly, there was no free supply because the design engineering and site run we....
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....fication claimed for the Fermenter with related items in Bill of Entry No. 107278 was Customs Tariff Heading 841989 and the benefit of Customs notification No. 16/2000 dated 1.3. 2000 was claimed. This classification was changed to Customs Tariff Heading 847989 and the benefit of the exemption notification was denied and this re-classification and denial of the benefit of the notification are not in dispute in the present appeal. The only dispute is whether the value of the technical drawings can be included in the value of the fermenter or they should be assessed separately. (b) There was a common price summary which includes commercial conditions with respect to prices, validity of offer, terms of payment, country of origin, scope of supply, guarantee, delivery conditions, etc. as recorded in page 90 of the paper book. (c) The design engineering and site run are not mere paper but cost about 30% of the value of the fermenter itself. They are an integral part of the project for sale of goods. (d) It is undisputed that the appellant has accepted in its reply to the SCN dated 24.5.2001 (as recorded in paragraph 7 of the OIO) that the manufacture of vaccine....
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....27)ELT 238(Tri-Mum)]. 13. We have considered the submissions on both sides. This matter was remanded by the Supreme Court to this Tribunal with a direction to re-decide the issue regarding includability of the charges paid for importation of design engineering and site run in the assessable value of the fermenters afresh because in the Final Order passed this Tribunal had not discussed Rule 9(1)(b) and 9(1) (e) read with Rule 4 and had also not examined the effect of the exigibility of the design engineering and site run which were assessed separately under Chapter 49. Paragraphs 3 & 4 of the judgment of the Supreme Court are reproduced below: 3. The only point which survives for consideration is regarding the includability of charges paid for importation of design engineering and site run in the assessable value of the fermenters. The show cause notice was based on the invocability of Rule 9(1)(b) and Rule 9(1)(e) read with Rule 4. The Tribunal has not referred to either of these rules while deciding the question of includability of the charges for importation of design engineering and site run in the assessable value of the fermenters. Another point raised by the asse....
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....ce, with reference to- (a) the tariff classification of such goods as determined in accordance with the provisions of the Customs Tariff Act; (b) the value of such goods as determined in accordance with the provisions of this Act and the Customs Tariff Act; (c) exemption or concession of duty, tax, cess or any other sum, consequent upon any notification issued therefor under this Act or under the Customs Tariff Act or under any other law for the time being in force; (d) the quantity, weight, volume, measurement or other specifics where such duty, tax, cess or any other sum is leviable on the basis of the quantity, weight, volume, measurement or other specifics of such goods; (e) the origin of such goods determined in accordance with the provisions of the Customs Tariff Act or the rules made thereunder, if the amount of duty, tax, cess or any other sum is affected by the origin of such goods; (f) any other specific factor which affects the duty, tax, cess or any other sum payable on such goods, and includes provisional assessment, self-assessment, re-assessment and any assessment in which the duty assessed is nil ; 16. Thus, t....
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....on report and sends the papers back to the Appraising Group to re-assess the duty. In a few rare cases, this back and forth between the Appraising Group and the examining shed may take place a few times. Assessment is a quasi-judicial function performed by the Assistant Commissioner/Deputy Commissioner or the Appraiser (in some cases) and the assessment, once completed, is appealable to the Commissioner (Appeals). The examining officer and others assist the assessing officer (Assistant Commissioner, etc.) in this assessment by physically examining the goods and writing their reports. Thus, in cases where the goods were assessed based on the documents and examination of the goods shows that a change is required, this process will be a re-assessment which is also part of the assessment itself. This process of assessment and re-assessment ends when the proper officer gives an order for clearance of goods for home consumption under section 47 of the Act. Section 17 of the Act which deals with assessment as was applicable during the relevant period reads as follows: 17. Assessment of duty.-(1) After an importer has entered any imported goods under section 46 or an exporter has ....
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....roper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption: ********** 19. The effect of the order of the proper officer under section 47 can be seen by referring to Sections 2(14), 2(25) and 2(26) which read as follows: (14) "dutiable goods" means any goods which are chargeable to duty and on which duty has not been paid; (25) "imported goods" means any goods brought into India from a place outside India but does not include goods which have been cleared for home consumption; (26) "importer", in relation to any goods at any time between their importation and the time when they are cleared for home consumption, includes or any person holding himself out to be the importer; 20. Once an order permitting clearance of goods for home consumption is issued by the proper officer, they cease to be imported goods and the person who imported them ceases to be an importer. Since the duty, if appl....
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.... amended replacing the 'assessment by the proper officer' with 'self assessment' by the importer giving powers to the proper officer to re-assess the duty so self assessed. Thus, both the self-assessment by the importer and the re-assessment by the proper officer are assessments. If the officer re-assesses the duty to a higher amount, then he shall, unless the importer accepts in writing such re-assessment, pass a speaking order. The Risk Management System (RMS) of the Customs Electronic Data Interchange System (EDI) selects some bills of entry for re-assessment by the officer and/or examination of goods by the officer and allows some to be cleared without such re-assessment/examination. At times, the importer, after self-assessing the goods in the system, finds that he has made a mistake in, say, not claiming an exemption notification. In such cases, the importer or his Customs broker requests the officer to recall the Bill of Entry from the system and re-assess by reckoning the exemption notification. Needless to say, once an order permitting clearance of goods for home consumption is issued either based on the self assessment by the importer or based on re-assessment by the offi....
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....for home consumption was issued. Therefore, the assessment under Section 17 as discussed in the above paragraphs was still open. Therefore, the submission of the appellant before the Supreme Court that design engineering and site run had already been assessed separately under Chapter 49 and the submission in the synopsis submitted before us that the technical documents had already been allowed assessment under Chapter 49 at Nil rate of duty and therefore, once their assessment has been finalized independently, the value of the same cannot be included in the value of the fermenters are contrary to facts and are, in fact, half-truths. While the Bill of Entry was assessed by the appraising group based on the documents submitted, the process was not complete because, the second half of the assessment viz., examination of the goods had to be completed. During examination, the alleged discrepancy was noticed. Clearly, there is nothing on record to show that an order permitting clearance of the design engineering and site run for home consumption under section 47 of the Act was passed. Therefore, the assessment of the design engineering and site run under Chapter 49 had begun but not comp....
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.... (e) of the Valuation Rules, the cost of the design engineering and site run must be included in the value of the fermenters. 31. According to the learned counsel for the appellant, the cost of the design engineering and site run cannot be included in the value of the fermenters because the sale of the former was not a condition for sale of the latter and therefore, in terms of Rule 9(1) (e), the value cannot be included. Further, according to learned counsel for the appellant, as per Rule 9(1) (b) (iv) also, the value cannot be included. 32. We find that the relevant Valuation Rules read as follows: Rule 4 - 9. Cost and services. - 1. In determining the transaction value, there shall be added to the price actually paid or payable for the imported goods, - a. ***** b. the value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of imported goods, to the extent that such value has not been included in the price actually paid or payable, namely:- i. materials, components, par....
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....e run was a condition for sale of the fermenters because they are sold together as per a single contract and were imported together in the same airway bill and are meant to be used together. The importer wanted to manufacture vaccines as per WHO GMP which will not be possible without the design engineering and site run and hence their import. The mere fact that the fermenter could have been imported without the design engineering and site run is irrelevant and what is relevant is what has actually been imported. 35. We agree that what must be considered is what has actually been imported and not what could have been imported. However, it is immaterial whether the goods were purchased under the same contract or not and whether they were imported under the same Airway bill or not. None of these factors should have a bearing on the way the goods are assessed. For instance, if an importer enters into a turnkey contract to import all the plant and machinery required to set up a factory or plant, there will be a single contract. However, each of the imported goods has to be classified, valued and charged to duty as applicable. If the imported goods are classifiable under different hea....