TaxTMI 
TaxTMI 
1995 (3) TMI 88
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.... 1984 onwards, after verifying the particulars submitted by the respondents. The appellants herein filed Appeal No. 237 of 1987 before a Division Bench of the Bombay High Court. The Division Bench, by Judgment dated 7th & 8th of March, 1991, affirmed the decision of the learned Single Judge. The prayer for the issue of a certificate to appeal to this Court was also declined. Thereafter, the appellants moved this Court in S.L.P. (Civil) No. 3203 of 1993 and this Court by Order dated 19-4-1993 granted leave to the appellants in the following terms : "Learned Solicitor General submits that he does not assail the judgment of the High Court insofar as it relates to the finding on the question `that the seller and the buyer have no interest in the business of each other' but he assails the judgment on the other question so far as it relates to the question that `the price is the sole consideration for the sale or the offer for sale' in Section 14(1)(a) of the Customs Act. Leave granted." 2. We heard Sri Dipankar P. Gupta, Solicitor General who appeared for the appellants and Sri Atul Setalvad, Senior Advocate, who appeared for the respondents. The respondents are a public limite....
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....out in the invoices is not the sole consideration for the sale of the goods and calling in aid the provisions of Section 14(1)(b) read with Rule 8 of the Customs Valuation Rules, he held that the value of the imported packs shall be raised by 1.5%. This was affirmed by the Collector of Customs (Appeals) by order dated 2-9-1986. Thereupon the respondents-company filed Writ Petition No. 317 of 1987 under Article 226 of the Constitution of India in the High Court of Bombay and assailed the aforesaid orders successfully. 4. In order to adjudicate the controversy raised in this appeal it will be useful to quote the relevant statutory provisions and also the important terms contained in the main agreement dated 6-11-1979 and the supplemental agreement dated 6-3-1980, executed between the respondents and the foreign collaborator, stressed by counsel. "Agreement made this 6th day of November, 1979 by and between AUTOMOBILES PEUGEOT, 75 avenue de la Grande Armee, PARIS FRANCE, (hereinafter referred to as `PEUGEOT') on the one hand, and MAHINDRA & MAHINDRA LIMITED, Gateway Building, Appollo Bunder, Bombay 400 039, India (hereinafter referred as to `M & M'), on the other hand. WHEREA....
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....&M, or its designated representatives, in PARIS, or, at the latter's request, be mailed in PARIS to M&M. 6. PEUGEOT shall not furnish or make available directly or indirectly the PEUGEOT Engine Technology necessary to manufacture, assemble and sell the Engine in India, to any other person. *** *** *** *** *** *** *** B - RIGHT TO MANUFACTURE, ASSEMBLE AND SELL *** *** *** *** *** *** *** (b) to assemble in India the Engine from parts, components and other elements delivered by PEUGEOT and/or manufactured locally or supplied by Indian suppliers : *** *** *** *** *** *** *** C - MODIFICATIONS, QUALITY, INDUSTRIAL PROPERTY, SECRECY 1. During the period of five (5) years from the effective date of this Agreement : *** *** *** *** *** *** *** i) M&M shall permit PEUGEOT's representative access at all reasonable times to M&M's premises to inspect all the operations associated with the manufacture and assembly of the Engine. 4. (a) PEUGEOT expressly retains its ownership and its exclusive possession of all the industrial property rights relating to the Engine and to the PEUGEOT Engine Technology such as processes and manufacturing secrets as well as lic....
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....GEOT agrees to supply CKD packs in the rough or finished state as may be required by M&M and agreed by PEUGEOT for the production of the Engine. Such packs are to be to the current PEUGEOT design. PEUGEOT also agrees to supply such service parts as may be required by M&M. 2. The price of a complete Engine in CKD form shall be PEUGEOT's ex-works price of the Engine as exported in CKD form to other parts of the world and as notified by PEUGEOT to M&M from time to time and as agreed to by M&M. 3. PEUGEOT shall prepare a Bill of Material for the Engine according to the specifications agreed upon with M&M which shall show individual part numbers. The cost of each such part shall be expressed as a percentage of the complete engine price in CKD form as defined in Clause F.2 hereinabove so that the total sum of all the said percentages shall be one hundred (100). Such Bill of Material shall be revised as necessary from time to time as may be mutually agreed. M&M shall have complete discretion in its selection of items to be purchased from such Bill of Material provided that adequate notice shall be given to PEUGEOT sufficiently in advance and taking into consideration PEUGEOT's pr....
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....old, 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 the seller and the buyer have no interest in the business of each 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; (b) where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf." 5. The main thrust of the arguments of the learned Solicitor General before us was that the price for the sale of CKD packs by the foreign collaborator to the respondents is not the true price. In other words, the price fixed or mentioned in the invoices was not the sole consideration for the sale of CKD packs, for the various reasons stated by the Assistant Collector in his order. According to the learned Solicitor General, the price mentioned in the invoices was (or should have bee....
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....e apparently sizeable amount paid (consideration shown) as per the agreements could only be by reckoning the supply of CKD packs and the service parts in the future. In the circumstances, the consideration mentioned in the agreement should cover, at least in part, the price of the CKD packs and spares that may be supplied later, though it is not expressly stated so. It may even include an element of payment of royalty for the products. 7. On the other hand, counsel for the respondent Sri Setalwad laid emphasis on the following : The High Court has concurrently found that the respondent and the foreign collaborator had no interest in the business of each other and the said finding is not assailable in this appeal especially in view of the conditions under which special leave was granted by this Court. The CKD packs and spares were supplied by the foreign collaborator to the respondents at the same price at which they were sold to others and the agreements did not provide for any concession to the respondents - buyers. In other words, the price charged by the foreign collaborator for the supply of CKD packs and spares and other articles is uniform. The payments under the agreement....