BHARAT EXPLOSIVES LTD Vs. CCE

JUDGEMENT

(1.) THE Appellants M/s. Bharat Explosives Ltd. formerly known as M/s. Narendra Explosive Ltd. have entered into an agreement with M/s. Biazzi of Switzerland on 15.12.1997 for setting up a plant for manufacture of explosives in India. As per Clause (1) of the contract M/s. Biazzi had to provide the basic engineering documents, drawing and information to develop it into detailed design engineering and drawings in India and all other services as detailed in Clause (5) of the agreement subject to the terms and conditions of the agreement. In consideration of the above M/s. Narendra Explosive Ltd. had to pay Swiss Fanes 5 lakh towards technical know -how and basic engineering fees. M/s. Biazzi also hold 23% equity in the Company. Since NEL could not execute the project the same was handed over to the appellants by the finance companies. The project was commissioned in October, 1992. The Indian Co. had imported capital goods, spare parts from M/s. Biazzi of Switzerland prior to 1988 and after 1988 also.

(2.) THE Assistant Collector who adjudicated the proceeding on considering the submissions made by the party held that the payment to be made by the appellants under the agreement dated 15.12.1977 to M/s. Biazzi were not related to the imported goods and ordered acceptance of the invoice price as the value of the imported goods.

(3.) AFTER having examined the records of the case, the Commissioner of Customs took the view that the order passed by the Assistant Collector is not legal and proper for the following reasons: The party has paid Basic Engineering fees of Swiss Francs 4 lacs, for the supply of Basic Engineering, drawing, documents and information to develop into detailed design engineering, drawing in India and also for supply of layout for the erection of plant and machinery. The party had also imported plant and machinery and the collaborator supervised the erection and setting up of plant and machinery. As per the judgment of CEGAT in Andhra Petrochemical in Order No. 394/93 -A dated 30.7.1993, basic engineering fees paid for technical know -how, licence, manufacturing process, design, data, drawing specifications procedure, flow sheets, construction and operation technology is addable to the import of plant and machinery for the purpose of assessable value. The said order of CEGAT is at present pending for final decision in Supreme Court of India. In view of the above in this case also the Basic Engineering fees are addable to the value of the plant and machinery imported by the party for the purpose of assessment. Accordingly, Commissioner of Customs directed the Assistant Collector of Customs to apply to the Commissioner of Customs (Appeals) for the correct determination of the following points: