Page 104 - ELT_15th May 2020_VOL 372_Part 4th

494 EXCISE LAW TIMES [ Vol. 372

is no transfer of technology under a license. Therefore, no question arises as
to whether without such license the plant to be set up in India could be op-
erated at all. The judgment also concludes in favour of the respondent the
fact that all amounts payable for training of personnel outside India cannot
be added to the value of the plant.”
24. We have already summarised the respondent’s case that the disput-
ed items on which the Customs Authorities intended to impose duty all related
to post-importation activities and could not be included in the assessable value.
It has been urged on behalf of the respondent that neither clause 9(1)b(iv), nor
9(1)(e) could be made applicable so far as the subject items are concerned. The
imported items according to the respondent are the equipments and the engi-
neering drawings etc. forming part of the contract were not necessary for pro-
duction of the imported goods. It has also been urged that the customs authority
had wrongly contended that the subject drawings etc. were purchased as the
condition that the sale of the imported goods and this excluded application of
clause 9(1)(e) of the 1988 Rules. In this regard interpretative note to Rule 4 was
relied upon. Reference was made, in particular, to clause (a) of that Note.
25. Revenue has not made out a case that the disputed items of contract
do not relate to post-importation activities. The statutory provision relied upon
by the Revenue to bring the subject-items within the duty net is Rule 9(1)(e) of
the 1988 Rules.
26. The expression “condition”, simply put, conveys the idea that
something could be done only if another thing was also done. In the given con-
text, it would imply that import of equipments could be allowed by the other
party provided the design features for post-importation activities were also ob-
tained from the same supplier or from a firm as per the overseas supplier’s direc-
tion. But there is no material before us to suggest that import of equipments was
effected with simultaneous obligation of SAIL that the designs relating to post-
importation activities should also be obtained from the same entity. 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. In our
opinion, reading such implied condition into the contracts would be impermissi-
ble in the absence of any other material to demonstrate subsistence of such condi-
tion. No part of the contract has been shown to us from which such condition
could be inferred. Necessity of subsistence such condition has been laid down in
the case of Ferodo India (P) Ltd. for invoking Rule 9(1)(e). In our opinion, the pro-
visions of Rule 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
clause 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 Interpreta-
tive Note to Rule 4, which is part of the Valuation Rules in view of the provisions
of Rule 12 thereof.
27. Similar were the revenue’s contentions in Essar Steel (supra) and Ta-
ta Iron & Steel Co. Ltd. (supra), except that in the factual context of those two cas-
es, there were different sets of agreements. But that difference is more of form
than of content. If a single agreement involves importation of dutiable equip-
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