Case Law Details
Brief facts
An agreement was entered into between the respondent and Met Chem Canada Inc. to associate Met Chem Canada Inc. as a technical consultant to render technical services in relation to implementation of a project to set up a plant in India for production of Hot Rolled Steel Coils and Strips. The services agreement is separate from the main agreement for setting up the said plant in India. Vide a show cause notice, Revenue demanded the addition of technical know-how charges to the value of plant.
In their reply to the show cause notice, the assessee stated that none of the provisions of Rule 9 of the Customs Valuation (Determination of Price of Imported Goods) Rules of 1988 would apply as no payment is made for technical services as a condition of sale of imported goods. In any event, the agreement for technical services is to be performed in India post-importation and, therefore, would have to be excluded from the value to be taken into account at the time of import. The Commissioner rejected the grounds stated by assessee and passed an order against the assessee. The said order was challenged in CEGAT and CEGAT set aside the order of the Commissioner holding that the plant could have been set up and could run without the supply of technical knowledge.
Contentions of the Assessee
The Assesee contended that as per the agreement it was clear that payments made under the technical services agreement were not as a condition of sale of the plant.
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