JUDGMENT
V.K.Agrawal
1. The issue involved in this appeal, filed by M/s. Otto India Private Ltd., is whether technical know-how is includible in the assessable value of goods imported by them.
2. Shri P.R. Biswas, learned consultant, submitted that the Appellants, in association with M/s. Humboldt Wedag India Ltd. (HWIL), entered into a turn key contract dated 23.5.94 with M/s Steel Authority of India (SAIL) for design, manufacture, supply of equipment, steel structures, etc., and transportation and delivery at site of the said materials, civil foundation and other civil works including storage, erection, testing, commissioning and performance guarantee tests of Revamping of 1.6 million tonne Coal Washery at Durgapur Steel Plant; that they imported BATAC Jig, disc fitter and spares valued at DM 10,13,647.81 plus U.S.$ 27,039.38 from M/s. K.H.D. Humboldt Wedag A.G.; that they are in no way related to the foreign supplier of the impugned goods; that there was no collaboration agreement with the foreign supplier nor there is any finding to the contrary in the Adjudication Order; that participation of HWIL in the project was based on the technical know-how from their collaborators in Germany, M/s. KHD Humboldt Wedag A.G.; that this is apparent from the Minutes of Meeting held on 30.6.93 between M/s. HWIL and the Appellants and also from the Memorandum of Understanding dated 10.8.93; that they had purchased the machinery and equipment from them on the basis of commercial transaction on principal to principal basis. The learned Consultant, further, submitted that in view of these facts it is incorrect on the part of the Revenue to hold that the import of equipments and spares were conditional and related to the designs and drawings imported by HWIL; that drawings in question were imported by HWIL under Bill of Entry No. 358 dated 27.11.1997; that Commissioner (Appeals) has rejected their appeal by relying upon Rule 9(1)(e) of the Customs Valuation Rules which provides that in determining the transaction value, all payments actually made or to be made as condition of sale of the imported goods shall be added to the price actually paid or payable; that however, there is no finding that any such condition was existing so far the import of the impugned goods is concerned.
3. Countering the submissions Shri Mondal, learned D.R., reiterated the findings as contained in the Adjudication Order and the impugned Order-in-Appeal wherein it is mentioned that the Appellants in association with HWIL entered into turnkey contract for Coal Washery Modernisation on the strength of technical know-how provided by M/s. HWIL’s foreign collaborator M/s. KHD Humboldt Wedag A.G., Germany; that Humboldt Wedag, Germany informed M/s. SAIL under letter dated 13.1.94 regarding supply of technical know-how, specific equipments and spares etc. with performance guarantee test; that consequently M/s. HWIL directed the Appellants under letter dated 7.2.94 to place the Order for supply and services of imported portion directly on Humboldt Wedag, Germany; that the sale of technical know-how by German company was conditional upon the sale of core equipment and spares; that M/s. HWIL had also clarified that taxes and duties, if any, leviable on the design engineering, etc. are not included in their referred price and are to be borned by the Appellants. The learned D.R. finally submitted that the cost of technical know-how is to be included in the assessable value.
4. We have considered the submissions of both the sides. It is admitted fact that the participation of M/s. HWIL in this project was based on the technical know-how from their collaborators in Germany. It is also mentioned by the Appellants in the Memorandum of Appeals that they were “obliged to purchase and import certain machinery and equipment from them on the basis of normal commercial transaction on principal to principal basis with a view to ensure that the performance of the plant could be guaranted by them, which was one of the conditions insisted upon by SAIL-DSP.” Further M/s. KHD Humboldt Wedag A.G., Germany confirmed to M/s. SAIL under Their letter dated 13.1.94 the supply of components and services by them to M/s. HWIL. The impugned goods were mentioned in the said letter. We also observe from the Adjudication Order that Shri A.N. Aash who appeared before the Adjudicating Authority for personal hearing on 10.4.200 had mentioned that the performance guarantee would bot have been possible had the preparatory equipments not been supplied by M/s. KHD, Germany, Further Shri N.V. Rajan, N.C. Banerjee and Shri S. Anand who appeared for personal hearing second time on 26.4.2000 again mentioned that they were interested in KHD/HWIL’s technical know-how and the equipments were imported to obtain the performance guarantee in the absence of which they would not have got the contract of SAIL. In view of these facts it is evident that the import of the impugned goods was directly connected with the supply of technical how-how. The learned Commissioner (Appeals) has rightly relized upon Rule 9 of the Customs Valuation (Determination of price of Imported Goods) Rules, 1998 which provides, interalia, that in determining the transaction value, there shall be added to the price actually paid or payable for the imported goods the value of the goods and services, which includes engineering, development, design work, and plans and sketches necessary for the production of the imported goods. We, therefore, find no infirmity in the impugned order and accordingly reject the appeal.