LexTHE BOMBAY DYEING AND MANUFACTURING CO. LTD. versus COLLECTOR OF CUSTOMS, BOMBAY
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- THE BOMBAY DYEING AND MANUFACTURING CO. LTD. A v. COLLECTOR OF CUSTOMS, BOMBAY FEBRUARY 18, 1997 (S.P. BHARUCHA AND S.B. MAJMUDAR, JJ.] B Customs Act, 1962 : S.14-f'roject impo1t-Assessment for customs duty-Project imp01t contract-Registration of-Held, it is open to Customs authorities to make a, C final assessment taking into account all relevant factors, and they are not inhibited by reason of registration of the contract under the Regulations-£.x- penditure taken into account for arriving at assessable value of project-Ad- missibility of-Project Import (Registration of Contract) Regulations 1965--Customs Tariff-Item 84, 66(/l). D TI1e appellant-assessee entered into a contract with an American Company to purchase certain capital goods, namely, manufacturing equip- ment, apparatus, machinery, including spare parts and accessories, for manufacturing Dimethyl Terephthlate (DMT). The assessee applied for registration or the contract under the Project Import Registration or E Contract Regulations, 1965. The Government approved the import or the said capital goods for the CIF value of US £ 17.00 million, overseas dismantling charges etc. for US £ 5.5 million, and fee for Technology and Technical Assistance valued at US £ 2.5 million. The contract was accord- ingly registered. Thereafter, the Joint Controller of Imports and Exports wrote to the Collector of Customs, Bombay not to debit the dismantling F charges to the face value of the said import licence. It was unsuccessfully contended by the assessee before the Customs, Excise and Gold (Control) Appellate Tribunal that the registration of the contract by the Customs authori~ies in terms of the Regulations amounted to pre-assessment of the value of the plant, and, therefore, the Collector G of Customs erred in applying the provisions of s. 14 of the Customs Act, 1962 to the valuation of the plant for purposes of customs duty. The Tribunal accepted the argument of the Revenue that there had only been a prm'isional assessment and it was open to the Collector to value the plant under s. 14 of the Act. The Tribunal also upheld the additions, in making H 117 118 SUPREME COURT REPORTS [1997] 2 S.C.R. A the final assessment of the value of the plant, of expenditure incurred on : (1) Inspection/dismantling/packing and forwarding; (2) Vendor inspec- tion; (3) Insulation removal; (4) Insurance in USA; (5) Tata Incorporated charges; and (6) Reimbursement to Tata Incorporated for miscellaneous - expenses. Aggrieved, the assessee filed the present appeal. B Allowing the appeal and modifying the judgment of the Tribunal, this Court HELD : 1. There being merely a provisional assessment at the stage when the contract is registered under the Project Import (Registration of C· Contract) Regulations, 1965, it is open to the Customs authorities to make a final assessment taking into account all factors that are relevant thereto, and they are not inhibite"d by reason of the registration of the contract under the said Regulations. (121-D-F] 2.1. The Inspection/dismaritlinglpacking and forwarding (Item 1), D insulation removal (Item 3), and insurance in U.S.A. (Item 4) were done, pursuant to the terms of the contract and, therefore, the expenditure incurred thereon was rightly taken into account in determining the asses- sable value of the said plant. (123-C] E 2.2. However, the additions on account of 'Vendor Inspection" (item 2), "Tata Incorporated charges" (item 5) and reimbursement to Tata Incorporated for miscellaneous expenses such as equivalent transport etc. (item 6) were not sustained. 'Vendor Inspection" was carried out by ~he original supplier of the plant. It was not required for purposes of disman- tling the plant nor for making it ready for being transported. Therefore, F expenditure on 'Vendor Inspection" should not have been taken into account for the purposes of arriving at the assessible value of the said plant. Again, the expenditure enumerated in items 5 and 6 was payment of fee of M/s. Tata Incorporated for rendering a service and the reimburse- ment to them of actual expenses and, as such, this expenditure also could G not be taken into account in arriving at the value of the plant. (123-A-B] Appollo Tyres v. Collector of Customs, (1997) 89 E.L.T. 7, relied on. 3. Spares to the extent of 10% of the enhanced value of the plant would form part of the project import and must be valued on par with the H sa
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