Page 91 - ELT_15th May 2020_VOL 372_Part 4th

2020 ] COMMISSIONER OF CUS. (PORT), KOLKATA v. STEEL AUTHORITY OF INDIA LTD. 481

3.5.1.3 Plant & Equipment including commissioning 24.627
spares
3.5.1.4 All mechanical & electrical spares for 2 years 2.251
operation & maintenance, insurance spares
including special tools & tackles
3.5.1.6 Foreign supervision charges during manufac- 2.842
ture of Indian equipment as well as for erec-
tion, commissioning & performance guarantee
tests
3.5.1.11 Training 0.200
Total 37.670
(quoted from the order in verbatim)
3. The basic wording of the two contracts are more or less similar,
Clause (c) thereof stipulates :-
“The Contractor has agreed to undertake basic and detail design and engi-
neering, layout engineering, training services, procurement, manufacturing,
shop testing, supply and delivery of the complete Plant and Equipment,
materials both imported and indigenous at site and carry out installa-
tion/construction of all civil works, supervision, erection, testing and suc-
cessful commissioning of the PROJECT and demonstrate the Performance
Guarantees etc. for the Project under the Terms and Conditions mentioned
hereinafter. The CONTRACTOR has also agreed to render the services for
insurance, port clearance including stevedoring, transportation, safe custo-
dy, handling, unloading, loading, transportation to site and any other ser-
vices required to complete the PROJECT under this contract.”
4. As would be evident from the subject heads contained in the above-
referred extracts from the Third Schedule to each of these contracts, the consortia
were to supply plant, equipments and spares as also certain basic designs and
supervisory services at site. SAIL wanted import duty to be charged on the plant
and equipments alone. SAIL’s stand is that the price for the plants and equip-
ments included all design and engineering for their manufacture. But designs
and drawings specified in the Schedule were all post-importation project related
and project implementation activities. The Customs authorities on the other hand
added the basic design and engineering fee of DM 2.23 million and supervision
charges during manufacture of Indian equipments and for erection, commission-
ing and performance guarantee tests of 0.675 million to the invoice value. In re-
spect of the second contract, direction was made for addition of basic design and
engineering fee of DM 6.65 million, as built drawings of DM 0.1 million and su-
pervision charges during manufacture of Indian equipments and for erection,
commissioning and performance guarantee tests of DM 2.842 million to the in-
voice value. The dispute had reached the Commissioner of Customs for Special
Valuation Branch, the authority of first instance, after a questionnaire was sent to
SAIL, which was responded to. The authority of first instance heard the repre-
sentative of SAIL. In the final orders, the authority of the first instance directed
the aforesaid additions. The said authority observed that the contractor was en-
trusted with the work on a turnkey basis, where the entire supplies and services
were dependant on each other. On this premise, the provisions of Rule 4 and
Rule 9(1)(e) of the Customs Valuation (Determination of Price of Imported Goods
Valuation) Rules, 1988 (hereinafter referred as the “1988 Rules”) was invoked to
EXCISE LAW TIMES  15th May 2020  91