Page 98 - ELT_15th May 2020_VOL 372_Part 4th

488 EXCISE LAW TIMES [ Vol. 372

Mr. Agarwal has relied on the decision of this Court in the case of Mukund Lim-
ited v. Commissioner of Customs reported in [2000 (120) E.L.T. 30] confirming an
order of the Tribunal in addition to the value of design and engineering, import-
ed into this country the supervision charges in India during design, erection and
performance guarantee test. This Court, in its order passed on 8th December,
1999, held :-
“1. This is a contract that contemplates the supply of basic design and en-
gineering drawings and the supervision of erection, testing and commis-
sioning based thereon. One is as much a part and a condition of the contract
as the other.
2. We find, therefore, no merit in the appeal. It is dismissed with costs.”
12. The case of Mukund Limited (supra) dealt with setting up of a clean-
ing plant as part of basic oxygen furnace shop of SAIL (coincidentally the same
respondent), for their Rourkela Steel Plant. For this purpose their contractor,
Mukund Limited had entered into an agreement with an overseas Company,
Davy Mckee (Stockton) Limited. In pursuance of that contract, Davy were to
provide basic design and drawing and also supervise the detailed engineering
erection and commissioning of the gas cleaning plant in India apart from training
of personnel abroad. The fabrication, manufacture etc. however was to be done
in India with indigenous goods based on designs supplied by Davy. The contract
amount was £ 20,00,000 and charges for design and engineering, supervision in
India during design, erection, commissioning and performance guarantee test
valued at £ 6,57,900 and training charges of £ 82,600 were to be paid separately.
Relying on a decision of this Court in CC (Prev.), Ahmedabad v. Essar Gujarat re-
ported in [(1997) 9 SCC 738 = 1996 (88) E.L.T. 609 (S.C.)], the Tribunal found in
the order reported in 1999 (112) E.L.T. 479 (T) :-
“6. The payment of $ (sic) 6,57,900 noted above in the price schedule is
towards the services indicated above in the Agreement and which is a nec-
essary concomitant to the supply of Design and Engineering drawings for
the gas cleaning plant made by Davy Mckee and imported by the appel-
lants. The appellants have been entrusted with the setting up of gas clean-
ing plant, and this could only be achieved not only by purchasing the basic
design and engineering drawings imported from Davy Mckee but also the
whole engineering package of supervision of detail drawing, erection,
commissioning and performance guarantee test. The payment made in for-
eign exchange towards supervision charges during design, erection and
commissioning will necessarily have to form part of the assessable value of
the imported goods and the value thereof will include not only the price
paid for design and engineering but also for supervision charges. This will
follow from Rule 9 of the Valuation Rules which provides for addition of
certain costs and services to the transaction value. Rule 9(1)(e) covers all
other payments actually made or to be made as a condition of sale of im-
ported goods by the buyer to the seller.”
(quoted verbatim)
This was a case where Tribunal reached finding on fact that the two sets of items
were to be added to reach the assessable value as the plant could be set up as per
the basic design only and the second set of designs, drawings and activities intri-
cately interlinked. This case did not involve importation of any equipment.
13. Another judgment of this Court in the case of Andhra Petrochemicals
v. Collector of Customs, Madras reported in [(1998) 9 SCC 109 = 1997 (90) E.L.T. 275
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