JAYASWALA NECO LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The appellant M/s. Jayaswala Neco Ltd. imported a consignment of drawings and designs valued around Rs. 44 lakhs and sought its clearance under Bill of Entry No. 1194/96, dated 14 -3 -2001 at nil rate of duty. Under the impugned order Commissioner of Customs Air Cargo, New Delhi confiscated the goods, with an option to the appellant to redeem it on payment of fine of Rs. 11 lakhs. A penalty of Rs. 3 lakhs has also been imposed under Section 112(a) of the Customs Act, 1962. The order has also directed that the imported drawings and designs be classified and assessed under Customs Tariff Heading 8502.39 as part of T.G. set, Turbine etc. cleared by the importers from Mumbai Customs House under Bill of Entry No. 15.03.01 -IMP -B -002617 (Manual B/E) dt. 22 -3 -2001. The basis of the impugned valuation is that in terms of Rule 9(1)(e) of the Customs Valuation Rules, the value of design and drawing is required to be added to the value of TG set, Turbine, which had earlier been imported.

(2.) The contention of the appellant is that the previous import of TG set and the import of drawings and designs at Delhi are two entirely different transactions and therefore, the value of one is not to go into the value of the other. It is also pointed out that the drawings and designs under import are not for the turbine sets and which had been earlier imported. The appellants have submitted that the import of the turbine set was in terms of Contract No. 05030856/9900467A - -0302 which was for supply of turbine and generator at a value of US 5,82,500, while the import of the drawings and design was in terms of another Contract No. 05030856/990467 - -0302B. During the hearing of the case, learned Counsel for the appellant has taken us through the relevant provisions of the two contracts and has shown that the second contract providing for the supply of drawings and designs at a cost of US 93,500 was to assist the Indian designer M/s. Associated Power Team Pvt. Ltd., Hyderabad for design, manufacture, procurement of balance equipment and erection, start up, testing of equipment, integration, commissioning and performance guarantee tests. It is the submission of the learned Counsel for the appellant that addition to value under Rule 9(1)(e) can arise only if it is a payment made or to be made as a condition for the sale of the imported the imported goods or to satisfy an obligation. The learned Counsel has pointed out that in relation to the sale of the imported turbo sets, generators, there was no condition that payment of US 93,500 must be made in addition to the price of the goods. The payment for drawings and designs were for entirely different consideration i.e. certain drawings designs etc. will be made available to the Indian designer for enabling him to carry out post import activities.

(3.) We have perused the records and have considered the submissions made by both sides. Rule 9 of the Customs Valuation Rules, 1988 relates to addition of certain costs and services in the assessable value of imported goods. Sub -rule (e) reads as under (sic) : -