Custom, Excise & Service Tax Tribunal
M/S. Petro Araldite Pvt. Ltd vs Cc, Chennai on 21 December, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI C/213/2003 (Arising out of Order-in-Appeal C. Cus. No. 164/2003 dated 30.04.2003, passed by the Commissioner of Customs (Appeals) Chennai). M/s. Petro Araldite Pvt. Ltd. : Appellant Vs. CC, Chennai : Respondent
Appearance Shri C. Ramkumar, Adv., For the applicant Ms. Indira Sisupal, AC (AR) For the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Honble Shri P.K. CHOUDHARY, Judicial Member Date of Hearing/Decision: 21.12.2015 FINAL ORDER No. 41775 / 2015 Per: R. Periasami This is the second round of litigation in the Tribunal. The present appeal is filed against the OIA dated 30.04.2003.
2. The brief facts of the case relates to import of raw materials and capital goods by the appellant from their related company M/s. Ciba Speciality Chemicals Inc. The DC (SVB) in his order No. 37/2001 dated 12.01.2001, ordered for adding of technical knowhow fee of US$ 3,75,000, drawing and design fee of US$ 7,15,000 and Engineering services fee of SFR 1,87,709 to the transaction value as per Rule 4 (1) (c) of CVR 88. On appeal against the said order, the Commissioner (Appeals) in his OIA No. 496/2001 dated 13.08.2001 set aside the impugned order and allowed the appeal with consequential relief.
3. Revenue preferred appeal against the said order of the Commissioner (Appeals) before the Tribunal and the Tribunal in Final Order No. 440 444/2002 dated 21.03.2001, in a batch of appeals remanded the case to the Commissioner (Appeals) for denovo with the direction to examine the case laws and to pass a fresh order. The Commissioner (Appeals) in the impugned order 164/2003 dated 30.04.2003, upheld the OIO. Hence the present appeal.
4. The Ld. Counsel representing for the appellants reiterates the grounds of appeal and submits that the Commissioner (Appeals) has not followed the directions of the Tribunal and not considered the citations referred in the Tribunals Final order. On merits, he submits the technical knowhow fee, drawing and design fee and engineering services fee are not includible in the transaction value. He drew attention to the agreements and also submits that they have imported only less than 1% of the capital goods from their related supplier and also drew attention to the OIO, where the adjudicating authority clearly held that the relationship does not influence the price and he should not have loaded the technical knowhow fee, drawing and design fee and engineering services fee with the transaction value. He relied on the following case laws in support of his contension.
1. UOI Vs. Mahindra & Mahindra Ltd.
1995 (76) ELT 481 (S.C.)
2. Daewoo Motors India Ltd. Vs. CC, New Delhi 2000 (115) ELT 489 (Tri.)
3. CC, New Delhi Vs. Prodelin India (P) Ltd.
2006 (202) ELT 13 (S.C.)
4. CC, Bombay Vs. Maruti Udyog Ltd. Gurgaon 1987 (28) ELT 390 (Tri.)
5. CC, Mumbai Vs. Can Pack India Pvt. Ltd.
2015-TIOL-201-SC-CUS-LB 6 Saint Gobain Glass India Ltd. Vs. CC, Chennai 2014-TIOL-1406-CESTAT-MAD
7. CC, Chennai Vs. Toyota Kirloskar Motor Pvt. Ltd.
2007-TIOL-94-SC-CUS
8. CC, Chennai Vs. Denso Kirloskar Industries Pvt. Ltd.
2015-TIOL-222-SC-CUS He further submits that out of the four case laws referred by the Tribunal for consideration by the Commissioner (Appeals), three are in their favour and only one case law in the case of CC, Ahmd. Vs. Essar Gujart Ltd. 1996 (88) ELT 609 SC, is against the assessees and not applicable to their case. He submits that the Honble Supreme Court in the case of Denso Kirloskar Industries Pvt. Ltd. (supra) has upheld this Tribunals order and he requests to allow their appeal.
5. On the other hand, the Ld. AR appearing on behalf of the Revenue reiterates the finings in the OIO as well as in the OIA. She relied on Essar Gujart Ltd.(supra) and submits that both the adjudicating authority and the appellate authority has rightly held that the technical knowhow fee, drawing and design fee and engineering services fee should added in the transaction value.
6. We have carefully considered the submissions by both sides and perused the records. We find that this is the second round of litigation, where the Tribunal in 2002 had remanded the case to the Commissioner (Appeals) with the direction to re-examine the case laws and to pass fresh orders, taking into consideration of various case laws relied by the appellants in Daewoo Motors India Ltd., (supra), Mahindra & Mahindra Ltd.(supra), Essar Gujart Ltd.(supra) and Maruti Udyog Ltd. Gurgaon (supra). Whereas, on perusal of the impugned order, we find that the Commissioner (Appeals) failed to give any finding of the directions of the Tribunal order to examine the case laws. We also find that it is full of factual errors and mistakes in the operative portion of the order, the Commissioner (Appeals) stated the appeal filed by the department is allowed when there was no revenue appeal pending before him and it is only the assessees appeal, which was remanded to the Commissioner (Appeals). At page-7 of the order where the appellate authority directed for addition of US$ 75000 instead of US$ 7,15,000. This clearly shows that the Commissioner (Appeals) has not examined the appeals in denovo on merits and not given any clear findings as directed by this Tribunal.
7. On merits, we find that the imports relates to the period 2001. On the issue of addition of lumpsum fee towards technical knowhow, drawing and design fee and engineering services fee, this Tribunal as well as well as Honble Apex Court has already settled the issue. This Tribunal in the case of Saint Gobain Glass India Ltd. (supra) on identical issue has allowed the appeal and also that the Tribunal in the case of Denso Kirloskar Industries Pvt. Ltd. (supra) also allowed the appeal. We also find that the Honble Supreme Court in the recent judgments in the case of Denso Kirloskar Industries Pvt. Ltd. (supra) upheld this Tribunals order reported in 2005 (192) ELT 1104 (Tri.-Bang.). The relevant portion of the judgment of the Honble Supreme Court is reproduced as under:-
2. Though the Commissioner included the aforesaid value, the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as CESTAT) has vide the impugned judgment dated 22.07.2005 held that the consideration paid for the aforesaid technical information provided by the Japanese Company cannot be included as the same is for post importation.
3. On the plain reading f the aforesaid agreement, it becomes clear that the technical information which was to be provided by the Japanese Company to the respondent was for the manufacture of the contract products by the respondent herein, naturally, after the setting up of the plant. This cost is, thus, incurred after the importation of the goods.
4. The matter is squarely covered by the judgment of this Court in Civil Appeal No. 3042 of 2004 dated 13.04.2015 in the case of Commissioner of Customs, Ahmedabad Vs. M/s. Essar Steel Limited 2015-TIOL-63-SC-CUS. We, thus, do not find any merit in this appeal which is accordingly, dismissed.
8. The ratio of the above Apex Court judgment is squarely applicable to the facts of the present case as in the present case also lumpsum fee related to technical knowhow, drawing and design fee and engineering services fee, which is not related to the imported capital goods. The adjudicating authority itself in his order clearly says that the relationship of the joint venture company where the relationship between the supplier and the appellant has not influenced the price of import and in fact accepted the transaction value except for loading the technical knowhow fee, drawing and design fee and engineering services fee. However, we find that the Honble Supreme Court LB decision in the case of Commissioner of Customs, Mumbai Vs. Can Pack India Pvt. Ltd.(supra) has upheld the Tribunals order and dismissed the Revenue appeal. By respectfully following the Apex Court decision and also maintaining this Tribunals decision referred above, we hold that the technical knowhow, drawing and design fee and engineering services fee, are not includable in the transaction value of the imported goods. Accordingly, we set aside the impugned order and allow the appeal with consequential relief if any.
(Dictated and pronounced in open court)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
BB
1