Custom, Excise & Service Tax Tribunal
M/S National Aluminium Company Ltd vs The Commissioner Of Customs on 14 June, 2012
THE CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL,
SOUTH ZONAL BENCH, WTC BUILDING, FKCCI COMPLEX,
K.G. ROAD, BANGALORE
Date of hearing: 14.06.2012
Date of decision: 14.06.2012
Appeal No. C/328/2007
(Arising out of order-in-Appeal No.1/2007(V)CH dated 17/01/2007 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals) Visakhapatnam)
For approval and signature
Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. M. Veeraiyan, Member(Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules 1982?
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules 1982 for publication in any authoritative report or not?
3.
Whether Their Lordships wish to see the fair copy of the Order
4.
Whether Order is to be circulated to the Departmental authorities
M/s National Aluminium Company Ltd. ...Appellant
Vs.
The Commissioner of Customs, Respondent
Visakhapatnam Present for the Appellant : Mr. S. K. Mohanty, Adv Present for the Respondent : Mr. Ganesh Haavanur, A.R. Coram:
Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. M. Veeraiyan, Member(Technical) ORDER No______________________ [Order per P.G. Chacko] This appeal filed by the assessee brings up a valuation dispute in respect of the equipments imported by them from M/s Five Call Badcock,(FCB for short) France during the period from December 1985 to April 1986 for setting up Plant in India. Under the relevant contract, the appellant had also paid to the supplier, system design and engineering charges amounting to F.Fr. 23,32,600/- (Rs. 40.84 lakhs). Under Rule (9)(1)(b)(iv) of the Customs Valuation (determination of price of imported goods) Rules 1988, This amount was provisionally included in the assessable value of the imported goods and duty paid accordingly. However, subsequently, the assessee claimed refund of excess duty by submitting that the above charges were not includible in the assessable value as these charges were relatable to equipments indigenously procured by them. The original authority rejected this plea of the assessee and held that the design and engineering charges were paid in relation to production of the imported goods and hence includible in the assessable value of the goods under Rule (9)(i)(b)(iv) of the Customs Valuation (Determination of Price of Imported Goods) Rules 1988. On this basis, the refund claim was rejected. The same view was taken by the Commissioner of Customs (Appeals), who also held that the design and engineering charges paid by the appellant to M/s FCB were includible in the assessable value of the imported equipments under the above Rules in the absence of proof of relation of such charges to the indigenous equipments. Hence the present appeal of the assessee.
2. The learned counsel for the appellant referred to the terms and conditions of the contract between M/s Nalco and M/s FCB and claimed that there was nothing to indicate any connection between the design and engineering charges and the imported equipments so as to attract the provisions of Rule 9(1)(b)(iv) ibid. He also claimed support from the Honble Supreme Courts judgment in Tata Iron and Steel Ltd. Vs Commissioner of Central Excise [2000(116)E.L.T. 422 (S.C.)] wherein the applicability of the above Rule to assessment of the goods in question was examined and a decision rendered in favour of the importer. The learned counsel also referred to SRF Ltd Vs Commissioner of Customs, Mumbai [2003(161)E.L.T. 721(Tri-Del) wherein engineering fee paid by the assessee to the foreign supplier was held not includible in the assessable value of the imported machinery under Rule 9(1)(b)(iv). Reliance was also placed on G.E. Plastics India Ltd Vs. Commissioner of Customs Mumbai [2004(169)E.L.T.46 (Tri-Del)] wherein the same provision was held to be inapplicable to the assessment of the imported equipment. The learned counsel finally pointed out that the provisions of Rule 9(1)(b)(iv) of the Customs Valuation Rules 1988 were not applicable to the equipments imported by the appellant in 1985 and 1986.
3. The learned Addl. Commissioner (A.R.) submitted that the design and engineering charges paid by the appellant to the foreign supplier were includible in the assessable value of the subject goods in terms of the view taken by this Tribunal in the case of Mukund Ld Vs Commissioner of Customs Mumbai [1999(112)E.L.T. 479(Tri)]. It was also pointed out that the Civil Appeal filed by M/s Mukund Ltd was dismissed by the Supreme Court vide Mukund Ltd. Vs Commissioner of Customs, Mumbai [2000(120)E.L.T.30 (S.C.)]. The learned Addl. Commissioner (A.R.) also claimed support from the following decisions:
* Andhra Pradesh Gas Corporation Ltd. Vs Commissioner of Central Excise, Hyderabad [2001(136)E.L.T. 860(Tri-Che)] * Panacea Biotech Ltd. Vs. Commissioner of Customs, New Delhi [2008(229)E.L.T. 323(S.C.)] * Andhra Petrochemicals Vs. Collector of Customs, Madras [1997(90)E.L.T. 275 (S.C.)]
4. We have carefully considered the submissions and have found eminently good reason for remanding this case to the original authority. Admittedly, the goods in question were imported in 1985 and 1986 when the Customs Valuation Rules 1963 were in force. The original authority and the appellate authority invoked Rule 9(1)(b)(iv) of the Customs Valuation Rules 1988 which were not invoked in the show-cause notice. Obviously a gross error of law was committed by both the authorities. The issue which ought to have been considered by these authorities was whether the design and engineering charges paid by NALCO to FCB was liable to be included in the assessable value of the imported goods under the Customs Valuation Rules 1963 which were in force during the period of imports. We therefore set aside the impugned orders and allow this appeal by way of remand with a direction to the original authority to undertake de novo adjudication of the show-cause notice in accordance with law and having regard to the observations made herein. Needless to say that the assessee should be given a reasonable opportunity of being heard.
(Pronounced and dictated in open Court) (M. VEERAIYAN) Member (Technical) (P. G. CHACKO) Member (Judicial) /pnr/ 4