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2025 (5) TMI 181
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.... subsidiary of the appellant, had invited sealed tenders for supply of spare parts for P&H Shovel. 7. On 28.03.2000, M/s Harnischfeger Corporation, USA submitted its quotations through its distributor M/s Voltas Limited. In the terms and conditions, towards engineering and technical service fees an amount of 8 percent of the Free on Board (FOB) amount valued on pro-rata basis against each shipment, was to be paid to M/s Voltas Limited, Kolkata in Indian rupees. Payment to be made to M/s Voltas Limited was not to be deducted from the FOB amount. 8. On 03.04.2000, M/s Voltas Limited submitted detailed quotation on behalf of its principal M/s Harnischfeger Corporation, USA (foreign supplier). 9. Purchase order was placed on 20.12.2000 with the foreign supplier for supply of spares required for P&H Shovel. Clause 5 of the purchase order is relevant and reads thus: 5. Terms of payment: (A) 100% of the FOB value shall be paid in US$ by means of a confirmed, divisible and irrevocable letter of credit which will be established in your favour through the State Bank of India, Corporate Accounts Group Br. 34, J.L. Nehru Road, Calcutta- 700071 (India) or their branch....
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....lcutta in all respect for ensuring optimum availability of P&H shovels. Some of the product support services which shall be rendered by M/s Voltas Ltd., Calcutta in all respects for ensuring optimum availability of P&H Shovels are as under: Regular product support visits by Voltas Service Engineers to all the operational mine sites for inspection of the shovels., providing technical updates, guidance on reports and maintenance at 'No Cost' to the projects. Assist Project Engineers identity actual requirement of spares for planned procurement, scanning of part nos. in the enquiry/tender to ensure that correct parts are quoted, scrutiny of orders and L/C to ensure shipment of the right parts. Extend assistance by providing technical write-ups for speedy custom clearance. Assist customer doing insurance survey at docks. Coordinate with various agencies in regard to the discrepancies in supplies for prompt replacement etc. In view of the above, payment of engineering & service charges at the rate of 8% (eight percent) of the net FOB value of the order will be made on pro-rata basis to M/s Voltas, Calcutta in equivalent Indian Rupees at the e....
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....tant Commissioner, appellant preferred an appeal before the Commissioner of Customs (Appeals), Kolkata ('Commissioner (Appeals)' hereinafter). By the order dated 21.06.2004, Commissioner (Appeals) held that the present case is squarely covered within the purview of Rule 9(1)(a) and Rule 9(1)(e) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (briefly 'the Customs Valuation Rules' hereinafter). Hence, the engineering and technical service fees/charges were includable in the assessable value of the imported goods. Commissioner (Appeals) confirmed the order passed by the Assistant Commissioner and vide the order dated 21.06.2004 dismissed the appeal. 13. This order of the Commissioner (Appeals) dated 21.06.2004 came to be challenged by the appellant before the CESTAT which was registered as appeal No.CDM-164/2004. CESTAT vide the order dated 20.04.2010 ('impugned order' hereinafter) held that payment made by the appellant to M/s Voltas Limited was only in connection with the sale of goods because M/s Voltas Limited was an agent/distributor of the foreign supplier. CESTAT was of the view that payment made by the appellant to M/s Voltas Limited had no ....
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....der of CESTAT dated 20.04.2010 are liable to be set aside. 16. Per contra, learned counsel for the respondent supports the impugned order of CESTAT. Adverting to the purchase order he submits that payment made to the Indian agent was clearly part of the FOB amount payable to the foreign supplier. 16.1. He also adverts to the documents titled as Voltas Limited Terms and Conditions and submits therefrom that it was clearly mentioned therein that prices quoted were exclusive of its engineering and technical service fees. Payment of 8 percent of the FOB price to the Indian agent was a condition of sale of the imported goods. Such payment was made purely as a condition of sale of the imported goods. It was based on an understanding between the foreign supplier and M/s Voltas Limited. Various services provided by M/s Voltas Limited were on behalf of the foreign supplier as its agent. The services rendered were to identify the requirement of the spares to be imported and therefore the payments so made had a direct nexus to the imported goods. As the local agent, services provided by M/s Voltas Limited were pre - importation activities and aimed at making the sale of spares by the fo....
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....ioner observed that Voltas Limited was the local agent of the foreign supplier. The product support services i.e. engineering and technical services provided by M/s Voltas Limited were primarily related to the type and quantum of spare parts required to be supplied by the foreign supplier. Duty of M/s Voltas Limited was also to assist the appellant during insurance survey at the port after importation of the identified spares. Such services were related to procurement of spares by the appellant and for the smooth sale of spares by the foreign supplier. 21.1. Appellant and its subsidiaries had no contract with M/s Voltas Limited for providing such services. The charges amounting to 8 percent of net FOB value were paid to M/s Voltas Limited as engineering and technical service charges for smooth importation of the goods. 21.2. Engineering and technical service charges paid to the local agent M/s Voltas Limited were 8 to 10 percent of the transactions of the appellant with the principal i.e. the foreign supplier. Such charges were paid as a recompense for the services rendered towards making the sale effective. Hence, engineering and technical service charges were nothing but co....
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....her payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable. The present case is squarely covered within the ambit of Rule 9(1)(e) of CVR'88 and accordingly, the aforesaid charges shall be added/includible in the transaction under Section 14 of the Act read with provisions of CVR'88. 24.1. Looking into the nature of imports, Commissioner (Appeals) held that services provided by the Indian agent was on behalf of the foreign seller and was directly related to the sale of imported goods. Provision for such service and payment of service charges constituted a condition of sale. In such circumstances, the first appellate authority upholding the view taken by the Assistant Commissioner held that engineering and technical service charges were includible in the assessable value of the imported goods. 25. When this order was appealed against, CESTAT vide the impugned order held: 6.1 We have carefully considered the submissions from both sides and closely exa....
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...., 1975 (51 of 1975), or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where- (a) the seller and the buyer have no interest in the business of each other; or (b) one of them has no interest in the business of the other, and the price is the sole consideration for the sale or offer for sale: Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50; (1A) Subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. (2) Notwithstanding anything contained in sub-section (1) or sub-section (1A) i....
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....aid or payable for the imported goods,- (a) the following cost and services, to the extent they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods, namely- (i) commissions and brokerage, except buying commissions; (ii) the cost of containers which are treated as being one for customs purposes with the goods in question; (iii) the cost of packing whether for labour or materials; * * * * * (e) all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable. 29. Rule 12 of the Customs Valuation Rules says that the interpretative notes specified in the schedule shall apply for the interpretation of the rules. In the Note to Rule 4, it is stated: The value of imported goods shall not include the following charges or costs, provided that they are distinguished from the price actually paid or payable for the imported goods: (a) Charges for constr....