LexCOMMISSIONER OF CUSTOMS, MUMBAI versus M/S CLARIANT (INDIA) LIMITED, WORLI
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COMMISSIONER OF CUSTOMS, MUMBAI
v.
MIS CLARIANT (INDIA) LIMITED, WORLI
MARCH 29, 2007
[S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.]
Customs Act 1962-Technical collaboration agreement-Between
manufacturer-Company and another company-Import of raw material by
A
B
the manufacturer under the agreement-Revenue imposing technical know- C
how charges to the assessable value of the raw material-Adjudicating
Authority held the charges not inc/udible to the value of raw material as the
companies were not related-Appellate Authority holding the same to be
includible-Tribunal in view of admission by the manufacturer, despite holding
that the companies were related, held the charges not inc/udible to the cost
of raw material-On appeal, held: In view of admission by the manufacturer D
that the companies were related, the matter needs de novo consideration
whether payment of technical know-how charges was the condition for import
of raw material in the light of relationship with the parties-Hence matter
remitted to Adjudicating Authority-Customs Valuation Rules. 1988-Rules
4(2)(9), 4(2)(b), 4(3)(b) and 8.
Respondent-company was manufacturer of leather chemical products.
Under a Technical Collaboration Agreement, it imported raw material from a
company. Department-appellant called upon the respondent to pay technical
know-how charges to the assessable value of the material u/r 4 (2) (a) and (b)
E
of Customs Valuation Rules, 1988 on the ground that the two companies were F
related and that payment of fees was the condition for importation of the quality
raw material. Adjudicating Authority held that the fees payable were not
includible in the assessable value of the raw material as the two companies
were not related. Appellate Authority held that the technical know how charges
were required to be loaded to the value of raw material as the two companies
were related. Customs, Excise and Gold (Control) Appellate Tribunal, on the G
admission of the respondent, held that the two companies were related.
However, it held that the Department was not correct in adding technical know-
how charges to the cost of raw material, since the issue was not before it.
SIS
H
516
SUPREME COURT REPORTS
[2007] 4 S.C.R.
A
Allowing the appeal, the Court
HELD: 1. The approach of the Tribunal is not correct Firstly, in the
present matter the entire finding of the adjudicating authority is based on
the premise that the two companies are not related. That premise got
eliminated when, before the appellate authority, the assessee fairly stated that
B the two companies were related. Secondly, once it is conceded on behalf of the
respondents that the two companies are related, that matter takes a different
complexion. It is in this light that the matter needs de novo reconsideration.
Therefore, the question as to whether the said payment ofDM 5,00,000 was
the condition for import of quality raw material needs to be examined,
C particularly in the light of the relationship between the parties. It is clarified
that merely because the two parties are related to each other will not amount
to under valuation per se. It will depend on the facts and circumstances of
each individual case. [Paras 9 and 11] [518-F-G; 519-A-E]
Union of India v. Mahindra & Mahindra Ltd., (1995) 76 ELT 481,
D referred to.
2. The matter is remanded to the Adjudicating Authority which will
decide the matter de novo in the accordance with the Customs Valuation Rules,
1988. (Para 12) [519-F]
E
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 509 OF 2002.
From the final Order No. CZB/4 l 80/WZB/2000 dated 27.11.2000 in Appeal
No.C/401/98-Bom passed by the Customs, Excise and Gold (Control) Appellate
Tribunal, West Regional Bench at Mumbai
F
Mathai M. Paikeday, Navin Prakash and B. Krishna Prasad for the
Appellants.
Joseph Vellapally, Sanjay R. Hegde, Ragvesh Singh and Krishna Kumar
Darbha for the Respondents.
G
The Judgment of the Court was delivered by :
H
KAPADIA, J. l. This is a civil appeal under Section 130E of Customs
Act, 1962 filed by the Department against the order dated November 27, 2000
in Appeal No. C 401/98-Bom passed by the Customs, Excise & Gold (Control)
Appellate Tribunal (CEGA T), Mumbai.
---)
COMMNR. OF CUSTOMS, MUMBAI v. CLARIANT (INDIA) LTD, WORL 1 fKA P -\l){A, J.] :) 17
2. Respondent No. I herein, during the assessment year 1977-78, imported A
raw material from M/s Sandoz Quinn (subsidiary of Mis SandoExcerpt shown. Read the full judgment & AI analysis in Lexace.