D.C.M. SHRIRAM CONSOLIDATED LTD. Vs. CC

JUDGEMENT

(1.) The appellant M/s. DCM, Shriram Consolidated Ltd. purchased a second -hand 150 Ton per day Caustic Soda Plant from M/s. Interface, Dubai. This purchase was made under contract No. DSCL/1MP/CAP/PUR/81 dated 27.4.1994. The plant was earlier owned by M/s. Georgia Pacifies, USA. The plant was in operation in USA prior to its decommissioning in February 1993. This plant had original been purchased by M/s. Georgia Pacific, USA from M/s. Asahi Chemicals Industries Ltd., (ACIL), Japan. After the purchase of the plant from M/s. Interface, Dubai, M/s. DCM, Shriram Consolidated entered into a technical collaboration agreement with M/s. Asahi Chemicals Industries Ltd. for setting up the aforesaid Caustic Soda Plant in India. When the Plant was imported, question arose as to whether the amount (Japanese Yen 32,000,000.00) paid to M/s. Asahi Chemicals Industries Ltd. towards collaboration agreement fees was to form a part of the assessable value of the plant under import. The question was raised specifically in the context of the judgment of the Apex Court in the case of Collector of Customs (Preventive), Ahmedabad v. Essar Gujarat Ltd. 1996 (88) ELT 609 (SC). The Dy. Commissioner of Customs who passed the order of adjudication dated 6.4.2000 (issued on 16.2.2001) held as under:

(2.) The Revenue felt aggrieved by the above order and filed an appeal before the Commissioner of Customs (Appeals). The Commissioner (Appeals) held in favour of the Revenue and ordered the addition of 32 million Japanese Yen to the price of second -hand Plant in order to arrive at its assessable value, again relying on the decision of the Apex Court in the case of M/s. Essar Gujarat Ltd. This made M/s. DCM Shriram Consolidated the aggrieved party. Hence the present appeal.

(3.) The contention of the importer is that the agreement for the purchase of the second -hand plant and agreement for technical collaboration are entirely separate and there is no dependency between the two. They point out that the purchase agreement for the plant is not conditional to the collaboration agreement with the Japanese party. It is their submission that the question of inclusion of the cost of Technology Collaboration Agreement can arise only if it is a condition of the sale of the plant that the buyer obtains license from the original manufacturer or the license holder. The appellants contends that the dictum contained in the Apex Court's decision in M/s. Essar Gujarat Ltd. is attracted only if obtaining operational license/technology license from the third party is an over -riding condition of the sale of the second -hand Plant, and not otherwise. They submit that in cases where the sale of the second -hand Plant is not dependent upon purchase of technology license, and the technology purchase is a separate arrangement, there is no requirement to make addition of the technology agreement fees to the price of the second -hand Plant. As against this, the Revenue contends that the foreign collaboration fees towards Plant, process flow sheet, Piping and instrument diagram, Data Sheets of equipment and instruments, Outline of piping arrangement, etc. is not cost of post importation activity, but various types of technical services and information essentially required for making the plant operational and the cost of such technical collaboration, which is essential to make the Plant operational, is to form part of the assessable value of a Plant in the light of the decision of the Apex Court in the case of M/s. Essar Gujarat Ltd.