Customs Valuation (Determination of Price of Imported Goods) Rules, 1988: r.9(1)(e) – Valuation of imports of plant and equipments and spares – Revenue included the price paid for design and technical documents in the transaction value of the imported goods – Plea of assessee that drawings and technical documents related to the post importation activities for assembly, construction, erection, operation and maintenance of the plant and these items could not be included in the value of imported goods – Case of revenue was that since the case involved importation of turnkey projects, the entire contract value have to be treated as transaction value for charging custom duty – Held: Revenue has not made out a case that the disputed items of contract do not relate to postimportation activities – The expression “condition” contained in r.9(1)(e) conveys the idea that something could be done only if another thing was also done – Revenue emphasised their case on the basis that as it was a turnkey project, importation of equipments and post-importation project implementation exercise were mutually dependant – Reading such implied condition into the contracts would be impermissible in the absence of any other material to demonstrate subsistence of such condition – No part of the contract was shown from which such condition could be inferred – The provisions of r.9(1)(e) cannot be automatically applied to every import which has surface features of a turnkey contract – Just because different components of a contract or multiple contracts give the shape of turnkey project to the imported items, without specific finding on existence of “condition” as contemplated in r.9(1)(e), value of all these components could not be added to arrive at the assessable value – Such an exercise would go against the provisions of Interpretative Note to r.4, which is part of the Valuation Rules in view of the provisions of r.12 thereof. Dismissing the appeal, the Court
HELD: 1. An importer of equipments of a plant could always choose to obtain drawings and designs for undertaking post importation activities from an overseas consortium supplying the equipments. This may confer on such arrangements attributes of a turnkey contract, but that fact by itself would not automatically attract the “condition” clause contained in Rule 9(1) (e) of the Valuation Rules. The revenue has proceeded with the understanding that since both were obtained from the same vendor, condition of obtaining designs etc., for post-importation activities was implicit in the contract. The Revenue has sought to emphasise their case on the basis that as it was a turnkey project, importation of equipments and post-importation project implementation exercise were mutually dependant. Reading such implied condition into the contracts would be impermissible in the absence of any other material to demonstrate subsistence of such condition. No part of the contract has been shown from which such condition could be inferred. [Paras 22 and 26][132-A-B, 133H; 134-A-B]
2. If a single agreement involves importation of dutiable equipments and also services for post-importation activities, and these two sets of items are segregable, it would be open to the importer to claim duty-exclusion in respect of items directly relatable to post importation activities in cases where Rule 9 of the Valuation Rules are applicable. In the present appeal, involving two import consignments, the authorities of First Instance and the Appellate Authority proceeded on the basis that since all the scheduled items formed part of the same contract and were linked with activities at post-import stage with the imported equipments, the provisions of Section 9(1)(e) could be invoked. Such reasoning infers subsistence of conditions for awarding post-importation work to the overseas consortia or makes import of both sets of items otherwise interdependent. The orders in original showed that the stand of SAIL was consistent that the subject drawings and specifications did not relate to the equipments imported and was meant for post importation activities and there was no condition laid down that the import of the equipments were to be supplemented by post-importation work. [Paras 27, 28][134-E, G; 135-A]
TISCO v. Commissioner of Central Excise Customs (2000) 3 SCC 472 : [2000] 1 SCR 876; Mukund Limited v. Commissioner of Customs 2000 (120) ELT 30 – referred to.
CC (Prev.), Ahmedabad v. Essar Gujarat (1997) 9 SCC
738 : [1996] 8 Suppl. SCR 757; Andhra Petrochemicals v. Collector of Customs, Madras (1988) 9 SCC 109; Commissioner, Delhi Value Added Tax v. ABB Limited (2016) 6 SCC 791 : [2016] 4 SCR 600 – held
inapplicable.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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