Page 101 - ELT_15th May 2020_VOL 372_Part 4th

2020 ] COMMISSIONER OF CUS. (PORT), KOLKATA v. STEEL AUTHORITY OF INDIA LTD. 491

“14. Another thing to be noticed is that a conjoint reading of the technical
services agreement and the purchase order do not lead to the conclusion
that the technical services agreement is in any way a pre-condition for the
sale of the plant itself. On the contrary, as has been pointed out above, the
technical services agreement read as a whole is really only to successfully
set up, commission and operate the plant after it has been imported into
India. It is clear, therefore, that clause 9(1)(e) would not be attracted on the
facts of this case and consequently the consideration for the technical ser-
vices to be provided by Met Chem Canada Inc. cannot be added to the val-
ue of the equipment imported to set up the plant in India.”
18. This Court, while dealing with the case of Essar Steel Limited (supra)
had referred to the case of Tata Iron and Steel Company Ltd. (supra). The latter au-
thority related to importation made under an umbrella contract, which branched
into two. One related to agreement for supply of technical documentation (MD
301) and the other for sale of equipments and materials pertaining to a blast fur-
nace and three torpedo ladle cars (MD 302). The value of MD 301 was 12.5 mil-
lion DM and MD 302 was 13.5 million DMs. The consignment under MD 301 was
cleared by the customs authorities having nil duty component as importer
claimed the same to be classified under sub-heading No. 4906.00 of the Customs
Tariff Act, 1975. But while scrutinising the consignment under MD 302, the cus-
toms authorities initiated action for including the value of MD 301 for determin-
ing the assessable value. The dispute reached the Tribunal. In paragraph 7 of the
said report comprising of the judgment of this Court, the finding of the Tribunal
has been summarized :-
“7. The appellant and other noticees preferred appeals before the Cus-
toms, Excise and Gold (Control) Appellate Tribunal, Calcutta which have
been disposed of by a common order. The Tribunal has held that the three
contracts entered into between the seller, i.e., SNP and the appellant were
in fact parts of one package, that is, the three constituted one composite
agreement. The technical documentation supplied to the appellant could be
divided into three parts : (i) those pertaining to the imported equipment,
(ii) those pertaining to the equipment which has yet to be procured or
manufactured by the appellant, and (iii) those relatable to post-import ac-
tivities undertaken by the appellant for assembly, construction, erection,
operation and maintenance of the imported equipment. The value of the
contract to the extent of (i) above was liable to be included in the value of
equipments and materials imported by the appellant though the value of
the technical documents covered by (ii) and (iii) above could have been ex-
cluded for payment of customs duty by reference to the Interpretative Note
to Rule 4 of the Customs Valuation Rules, 1988 (hereinafter “the Rules”, for
short). However, since separate values have not been shown, the benefit of
the Interpretative Note to Rule 4 above said was not available to the appel-
lant and the entire value of the two contracts was liable to be clubbed to-
gether for the purpose of levying customs duty.”
19. It was held and observed by this Court in the case of Tata Iron and
Steel Company Ltd. (supra) :-
“16. It is nobody's case that the seller had an obligation towards a third
party which was required to be satisfied by it and the buyer (i.e. the appel-
lant) had made any payment to the seller or to a third party in order to sat-
isfy such an obligation. The price paid by the appellant for drawings and
technical documents forming the subject-matter of contract MD 301 can by
no stretch of imagination fall within the meaning of “an obligation of the
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