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Showing contexts for: mrpl in M/S. Mangalore Refinery & ... vs The Commissioner Of Customs on 8 August, 2012Matching Fragments
3. The relevant facts in brief are as follows:
(a) MRPL, in 1993, commenced setting up a refinery at Mangalore with a capacity to refine 3 million metric tones per annum (MMTPA) of crude oil. The refinery commenced its commercial operation during March 1996.
Subsequently, during 1997-1998, MRPL commenced Phase-II expansion of the refinery to increase the refining capacity from 3 MMTPA to 9 MMTPA. MRPL imported various equipments in this regard under project imports.
As a part of Phase-II expansion, MRPL installed a Continuous Catalytic Reforming Unit (hereinafter referred to as CCR2) to produce unleaded high-octane petrol from Naptha. This was set up as a secondary processing unit. The unit was having capacity to process 9400 BPSD (barrels per single day) of naphtha. Installing this CCR2 unit was originally not included in the Phase-II expansion plan, but was later initiated as a part of the expansion. CCR-2 can utilize fuel oil in the platform heater in addition to fuel gas unlike CCR-1 which can use only fuel gas. As in the case of other imports of Phase-II expansion, MRPL also imported various off-shore equipments and materials required for the CCR2 unit.
(b) Penalty of Rs. 1,00,000/- was imposed on M/s. MRPL under Section 112(a) of the Customs Act 1962 and a penalty amount of Rs. 1,05,17,734/- was imposed under Section 114A of the Customs Act, 1962 on M/s. MRPL.
(c) The assessable value in respect of 3 Bills of Entry (Bs/E Nos. 596, 599 and 600 all dated 05.03.1999) was redetermined as Rs. 40,23,89,283/- by including the proportionate costs of the basic design package and extended basic design and engineering i.e. Rs. 6,48,82,230/- and an amount of Rs. 1,05,17,734/- being the total import duty short paid was demanded under Section 28 (1) of the Customs Act 1962. Also the interest chargeable under Section 28AB of the Customs Act 1962 on the total differential duty of Rs. 1,05,17,734/- was ordered to be paid.
(a) The value attributable to (i) Basic Engineering Design Package (BEDP) supplied by the Process Licensor UOP-IA and (ii) Extended Basic Engineering (EBE) and Detailed Design Engineering (DDE) provided by the supplier (i.e. the Japanese consortium) to itself requires to be added to the value declared by MRPL in the Bs/E relating to various imported goods.
(b) The requirement of BEDP is governed by the Engg. Agreement between MRPL and UOP-IA. This agreement has to be read with the Licence Agreement (1993) and the Engg. Agreement (1993) entered into at the time of the setting up of the CCR-1 Plant.
18. In view of the above, the issues framed in paragraph 7 are answered as follows :
(a) ADG DRI had jurisdiction to issue the show-cause notices and the same have been validly issued.
(b) The Agreements between MRPL and UOP-IA and the Agreements between MRPL and consortium of three companies are closely interlinked. The whole transactions covered by the Agreements are in the nature of a package, a deal for supply of sophisticated technology along with the equipments required for adopting the said technology. In the context of manufacture of the equipments, certain confidential information and data are required to be furnished by the Licensor to the actual manufacturer of equipments through the consortium of companies. In view of the above, the consortium of companies is required to ensure secrecy of the information/data received by them. Since the tender inviting documents is dated 25.6.97, whatever engineering services, designs are required for ordering the equipments have to precede the said date. Therefore, the engineering services and design envisaged in the agreements with UOP-IA and FEC cannot be treated as providing mere specifications for the purpose of ordering the equipments. Further, the detailed design which is undertaken by the vendors (who may be any of the three FEC Companies or third parties) also requires review and approval by the Licensor, showing the integrated nature of the design carried out in three stages. The LEC contractors who supply indigenous equipments are also required to undertake design compatible with designs of equipments supplied by FEC. In view of the above, the basic design package and the extended basic design and engineering are not in the nature of buyers assists but are essential for the manufacture of equipments whether manufactured by FEC or procured from other vendors by FEC and supplied to MRPL.