TATA IRON AND STEEL CO. LTD. versus COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, BHUBANESHWAR, ORISSA

Citation: [2000] 1 S.C.R. 876 · Decided: 16-02-2000 · Supreme Court of India · Bench: S.P. BHARUCHA · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
B 
TATA IRON AND STEEL CO. LTD. 
v. 
COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, 
BHUBANESHWAR, ORISSA 
FEBRUARY 16, 20CO 
[S.P. BHARUCHA, R.C. LAHO'fl AND MRS. RUMA PAL, JJ.] 
Customs Valuation Rules, 1988 : 
C 
Rule 9(l)(b) and (e}-Valuation of imported goods-Equipment im-
ported along with engineering documents on basis of three contracts-Third 
contract recited overall price including equipment and engineering docu-
ments-Concessional duty over project imports and nil duty over engineering 
documents-Show cause notice issued and equipment valued along with 
D engineering documents-High Court in writ petition ordered release of goods 
on payment of penalty and furnishing bank guarantees-Fresh show cause 
notice issued and another order for payment of duty and penalty passed-In 
appeal CEGAT held, the three contracts to be part of one package including 
value of engineering documents in value of equipment-On appeal Held, 
E value of engineering documents neither dutiable nor clubbable with value of 
equipment-Matter remanded to ascertain whether equipment had been 
under-valued-f'roceedings against those exonerated by the Tribunal could 
not be re- opened-f'roject Import Regulations, 1986-Custom Tarrif Ac~ 
1975-Sub Heading No. 4906.00. 
F 
G 
Rule 9(1)(b)(ii) to (iv)-Applicability-Held, applicable if goods and 
seTVices were supplied by the buyer to the j·eller free of charge or at a reduced 
cost for use in connection with the production and sale of imported goods to 
the extent that such value has not been included in the price actually paid or 
payable. 
Rule 9( I)( e )-Applicability-Obligation of the seller towards a third 
party to be satisfied by the seller and making of a payment by the buyer to 
the seller or to a third party to satisfy the same is a condition precedent-Held, 
where condition not satisfied and equipment imported along with engineering 
H documents, value of both i:annot be clubbed together. 
876 
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i 
' ' 
TATA IRON AND STFELCO. LID. v. C.C.E. 
877 
Interpretative Note to Rule-4-Applicability-Held, value of charges not A 
covered by clauses (a j to ( c) could not be included in the value of imported 
equipment-Where price of engineering documents had been separately paid, 
Note cannot be pressed into se1vice-Value of documents and drawings etc. 
cannot be 'charges for co11stmctio11, erection, assembly etc.·· of imported goods 
as they were covered by a separate contract. 
The appellant company, imported certain equipment along with their 
drawings and engineering documents after signing a protocol with the 
seller stating that the total price would include the price of the equipments 
and engineering documents. Three contracts were entered; (1) Agreement 
B 
for supply of technical documents at the price of 12.5 million DM (MD C 
301), (2) Agreement for sale of equipment at the price of 13.5 million DM 
(MD 302) and (3) An overall sale contrdct re-cited at an overall price of 
26 million DM. 
The appellant registered contract MD 301 under the Projtct Import 
Regulations, 1986 to avail a concessional rate of duty for project imports. D 
The consignment consisting of technical docuI!J.ents arrived und was clas-
sified under Sub-Heading No. 4906.()0 of the Customs Tariff Act, 1975 
assessable to nil duty. The first consignment under contract MD 302 also 
arrived which was cleared after provisional assessm1:nt un payment uf duty 
on declared value of 60,75,IJIJO FOB. 
E 
The second consignment was also cleared. A show cause notice was 
issued as to why goods covered by contract MD 301, consisting of technical 
documents should not be included in the value of goods covered by 
contract MD 302. The appellant filed a writ petition before the High Court 
challenging the show cause notice and the goods were ordered to be 
F 
released after furnishing bank guarantees of R.s. 8 crores along with a 
reduced extra duty than that was demanded and the admitted customs 
duty. 
Another show cause notice was issued to the appellant company, its 
two officers, and the engineering consultant. An order assessing customs G 
duty at Rs. 15,49,09,060 was passed along with a penalty. The notices 
appealed to the Custom, Excise and Gold (Control) Appellate Tribunal 
which held the three contracts to be part of one package. It held that 
technical documents pertaining to imported equipment were includablt in 
the value of equipment, however documents pertaining to equipment to be H 
878 
SUPREME COURT REPORTS 

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