Custom, Excise & Service Tax Tribunal
M/S. Murugappa Morgan Thermal Ceramics ... vs Cc, Chennai on 31 August, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI C/336/2003 (Arising out of Order-in-Appeal No. 327/2003 dated 30.06.2003, passed by the Commissioner of Custom (Appeals), Chennai). M/s. Murugappa Morgan Thermal Ceramics Ltd. : Appellant Vs. CC, Chennai : Respondent
Appearance Shri T. Ramesh, Adv.
For the applicants Ms. Indira Sisupal, AC (AR) For the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Honble Shri P.K. CHOUDHARY, Judicial Member FINAL ORDER No. 41123 / 2015 Date of Hearing/Decision: 31.08.2015 Per: R. Periasami The appellant filed appeal against the Commissioner (Appeals) Order dated 30.06.2003.
2. The brief facts of the case relates to valuation of imported goods by the appellant under project imports. The appellant was registered with customs for import of goods under project imports for supply to the new Naptha Cracker Project setup by the Reliance Industries Limited (RIL). The appellants imported metallic Cartons and Empty Bent Cartons under six Bills of Entry during the period16.02.1995 to 27.06.1995 for manufacture of final product called Z Blocks (Ceramic Fibre Modules) and clearance to the above project of RIL. The adjudicating authority in his denovo order dated 02.05.2002 dropped the proceedings under the SCN and also ordered for refund of the differential duty paid. Aggrieved by this order, the Revenue filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) in the impugned order set aside the OIO and allowed the Revenue appeal. Hence, the present appeal.
3. Ld. Advocate appearing on behalf of the appellant reiterated the finding of the adjudicating authority dated 02.02.2002 and submits that the Dy. Commissioner has correctly dropped the proceedings. He drew attention of the Bench to the agreement drawn between CIRIA-Italy and MMTCL (the appellant). According to Clause 6 of the agreement the appellants to pay 10% as commission on the final products sold directly by MMTCL. He also drew attention to the letter of intent between RIL and CIRIA, where the RIL had placed order with the CIRIA-Italy foreign supplier for the entire project. As part of the sale, portion of the project modules has to be supplied through the appellants. He submits that these goods were imported and as per the original purchase order between RIL and CIRIA, and same was supplied to the project and used in the manufacture of Z Blocks and there was no direct sales of goods by the appellant nor they have placed any purchase order. He submits that the adjudicating authority in his order has correctly dropped the proceedings. The Commissioner (Appeals) has not discussed any of the issues and findings of the OIO as to how the order is not acceptable instead by relying Rule 9(1) (e) of CVR, he ordered for addition of 10% on the invoice value, merely stated that there is Technical knowhow fee paid. He further submits that the Commissioner (Appeals) not only set aside the order without giving any detailed findings and also enhanced loading to 14.8%. Whereas in the SCN only 10% was proposed. In support of his contention the Ld. Advocate relies on the following decision in the case of HIS Automotive Ltd. Vs. CC, Chennai-2008 (224) ELT 439 (Tri-Chen.).
4. On the other hand the Ld. AR reiterated the findings in the OIA and submits that there are three entities involved viz. CIRIA, RIL and MMTCL. She refers the letter of intent and also the detailed findings in the OIA at page -14 and submits that the Commissioner (Appeals) has correctly worked out how much percentage to be added and also worked out the cost of the final product ie Z Block and correctly loaded 14.8% and also directed the authority to finalize the provisional assessment.
5. After hearing both the sides and on perusal of the records, we find that the short issue is whether the impugned order is correct in setting aside the OIO or otherwise in so far as relates to valuation of imported goods. The period of import relates to Feb. 1995 to June 1995 pertaining to only six consignments. In the first round of litigation the adjudicating authority loaded 10% value which was set aside by the Commissioner (Appeals) and remanded to the adjudicating authority to apply principles of natural justice. On perusal of the denevo OIO dated 02.05.2002, the adjudicating authority dealt the issue in detail on various clauses of Agreement and contract terms for the import under project import regulations and dropped the proceedings. On the other hand, we find that the lower appellate authority in her order nowhere discussed and rebutted as to how the findings of the adjudicating authority was not acceptable instead as per straightaway came to the conclusion that the payment made as per the agreement are to be added to the value of the imported goods as there must be clear cut evidence to show the know how fee is a condition of sale of goods. Whereas we find that the original authority has examined the contract agreement between CIRIA and the appellant. We perused the contract agreement dated 11.02.1994, between CIRIA SpA Italy and MMTCL India. Clause 6 of the agreement is reproduced as under:-
o6. For the Z-BLOK produced by MMTCL in INDIA under CIRIAs Know-how and sold directly by MMTCL. MMTCL will pay to CIRIA a commission of 10% (ten percent) payable in the currency of the order awarded to MMTCL on Ex-works/FOB prices. We also find that the letter of intent dated26.10.1994 placed by RIL to CIRIA SPA, Italy for supply of refractories and ceramic fibre insulation blocks and other accessories for the project. The clause II and (2) of the said letter of intent stipulates that supply of refractory bricks and ceramic fibre modules supplied by MMTCL, India. Clause III & iii also stipulates that the entire purchase contract is with the foreign supplier and only for the purpose of convenience and facility direct payment showing the separate order to MMTCL. We find both the conditions have been dealt in detail in the OIO passed by the adjudicating authority. We find that MMTCL is imported the goods under project imports and used the goods in the manufacture of final products which is called Z Blocks, and the same were supplied as per the original contract between to RIL & CIRIA. We also find that as per clause (6) of agreement between CIRIA and MMTCL, appellants have to make payment of 10% as a commission if the final products directly sold. In the present case, it is clearly brought out in the OIO that there is no direct sale of finished goods involved. The LAA without going into the details of contract and without examining the facts straight away ordered for loading of 14.8%. Therefore we hold that loading of value ordered by the LAA is not justified and liable to be set aside. Accordingly, the impugned order is set aside and the appeal is allowed.
(Order dictated and pronounced in the open Court)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
BB
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