( 1 ). The Union of India, the Collector of Customs, Bombay and the Assistant Collector of Customs. Special Valuation Branch, Bombay are the appellants in this appeal. M/s Mahindra and Mahindra Limited, Bombay are the respondents. The matter herein arises under the Customs Act, 1962. The respondents filed Writ Petition No. 3167 of 1986 in the High court of Bombay and assailed the order dated 20/9/1985, passed by the Assistant Collector of Customs, evidenced by Ext. K and the appellate order dated 2/9/1986 passed by the Collector of Customs (Appeals) affirming the said order, evidenced by Ext. M. A learned Single Judge by judgment dated 27/7/1988 quashed the aforesaid orders and also ordered refund of excise duty recovered from the respondents during the period from June 1984 onwards, after verifying the particulars submitted by the respondents. The appellants herein filed Appeal No. 237 of 1987 before a division bench of the Bombay High court. The division bench, by judgment dated 7/3/1991, 8/3/1991, affirmed the decision of the learned Single Judge. The prayer for the issue of a certificate to appeal to this court was also declined. Thereafter, the appellants moved this court in Special Leave Petition (Civil) No. 3203 of 1993 and this Court by order dated 19-4-1993 granted leave to the appellants in the following terms:

"learned Solicitor General submits that he does not assail the judgment of the High Court insofar as it relates to the finding on the question that the seller and the buyer have no interest in the business of each other but he assails the judgment on the other question so far as it relates to the question that the price is the sole consideration for the sale or the offer for sale in Section 14 (i) (a) of the Customs Act. Leave granted. " (emphasis supplied)

( 2 ). We heard Shri Dipankar P. Gupta, Solicitor General who appeared for the appellants and Shri Atui Setalvad, Senior Advocate, who appeared for the respondents. The respondents are a public limited company carrying on business in the manufacture of different types of automobiles/vehicles. Their factories are situate at Bombay, igatpuri and Nasik. They entered into a technical know- how agreement with M/s Automobile Peugeot, a French company, in respect of a diesel engine manufactured by Peugeot and known as IDP 4. 90. The original agreement is dated 6/1 1/1979, Ext. B, (pages 98-109 of the Paper-Book) and the supplemental agreement is dated 6/3/1980 (pages 112-1 14 of the Paper-Book ).

( 3 ). The period of agreement was for a duration of 10 years from the date of securing the consent of the government of India to the agreement. The respondents agreed to pay to the foreign collaborator in Paris a sum of 15 million French Francs in three instalments. It is common ground that the respondents remitted the amount so agreed to Peugeot in three instalments on27/5/1980, 15/4/1981 and 18/9/1981, amounting to Rs. 95,27,448. 00, Rs. 84,17,568. 00 and Rs. 81,83,058. 00, respectively. Article F in the agreement dealt with the subject of supply of CKD packs and service parts. The respondents imported CKD packs and service components from Peugeot from the year 1982 onwards. In June 1984, the Customs Appraising Group referred the question as to the valuation of a consignment of crankshafts imported, to the Special Valuation Branch of the Customs Department. The Assistant Collector, after hearing the company, issued an order dated 20/9/1985, holding that out of the lump sum payment made to the respondents M/s Peugeot 15% is attributed towards designs, patents and trade marks, and the circumstances under which CKD packs are imported warrant valuation under Rule 8 of the Customs Valuation Rules, 1963 read with Section 14 (l) (b) of the Customs Act and excludes Section 14 (a) of the Act before assessment. He took the view that the composite agreement envisaged supply of CKD packs of components for 5 years, and it is obvious that the price of CKD packs set out in the invoice