2015 Supreme(SC) 1036

SUPREME COURT OF INDIA
A.K. Sikri, R.F. Nariman, JJ.
M/S GMR ENERGY LTD. - APPELLANT
VERSUS
COMMISSIONER OF CUSTOMS, BANGALORE - RESPONDENT
CIVIL APPEAL NO.4920 OF 2007 WITH CIVIL APPEAL NO.3594 OF 2008
Decided on : 27-10-2015

IMPORTANT POINTS
Declaring the contents of the Bill of entry truthfully and producing the invoice relating to the imported goods constitutes compliance of Rule 10(1)(a).
Not producing the contract when the same was not required by the proper officer dies not violate Rule 10(1)(b).
When exemption is conditional to issue of certificate and recommendation by designated authorities and when these are obtained, merely not furnishing the same before import because they were not required by the authorities would not entail denial of exemption.

Headnote:(a) Customs Valuation Rules, 1988 – Rules 4 and 9 – Applicability of Rule 9 depending upon applicability of Rule 4 – Rule 4 applies only case of sale of the imported goods for export to India – Instantly imported goods constituting replacement parts after stipulated running hours of the plant – There is no sale – Rule 4(2)(g) and Rule 9(1)(d) apply in case of resale – There being no resale, disposal or use of the very imported goods Rule 4(2)(g) and Rule 9(1)(d) do not apply – Further, there being no payment for the replacement parts, Rule 9(1)(e) does not apply. (Para 11) (b) Customs Valuation Rules, 1988 – Rule -5 – BSES case – Four years earlier than the instant case – Goods in BSES case would not be identical to instant case – Rule 5 does not apply. (Para 12)

       (c) Customs Valuation Rules, 1988 – Rule 8 – Price of the imported goods – A rotable exchange programme price – Common to all such supplies world over – List unit prices or catalogue prices – Not prices after taking into account re-exported items’ value – Not incremental price – Tribunal’s conclusion not sustainable. (Para 14, 15)

       (d) Customs Valuation Rules, 1988 – Rule 10(1)(a) r/w section 46(4) – Assessee, while presenting the bill of entry, declaring its contents truthfully and producing the invoice relating to the imported goods – No infraction of Rule 10(4). (Para 19)

       (e) Customs Valuation Rules, 1988 – Rule 10(1)(b) r/w section 17(3) – Power of proper officer to require the importer, exporter or any other person to produce any contract, broker’s note, policy of insurance, catalogue or other document to ascertain the duty leviable on the imported goods or export goods – Instantly, proper officer not requiring the assessee to produce any such document – LTAPSA not produced – No infraction of Rule 10(1)(b). (Para 21)

       (f) Custom law – Exemption – Notification requiring certificate and recommendation from designated authorities for grant of exemption from duty – Assessee not furnishing the certificates prior to import – Furnishing the same in reply to show cause – Fulfills the requirement – No need to hairsplitting and deny the benefit – Tribunal rightly dismissing appeal of Revenue. (Para 25)

       Facts of the case:

       The appellant had imported a naphtha based power plant with five gas turbines which was mounted on a barge for purposes of power generation. For keeping the power plant continuosuly in good running condition the appellant entered into an agreement for service and supply of parts with GE, USA being a Long Term Assured Parts Supply Agreement dated 12.12.2000, (LTAPSA). In terms of the said agreement, the appellant was to make payments based on either fired hour charges or maintenance charges. Various parts of the Gas Turbine Hot Section of the said plant, which had to be imported under the LTAPSA were imported under two bills of entry dated 25.6.2003 after 12,500 fired hours had come to an end. The parts that were identified as having to be replaced were re-exported back to GE, USA under cover of shipping bills of the month of May, 2003 before the two bills of entry dated 25.6.2003 were presented for import of the replaced parts to the customs authorities. The appellant paid customs duty based on the value declared in the said bills of entry but did not make any payment to GE based on these invoices since their payments had already been made based on fired hour charges. The assessment of the said import was completed by the customs department after due verification of the documents produced at the time of import.

       Subsequently, by a show cause notice dated 12.8.2004, the customs department opined that 1/3rd of the value of the imported items be added to the invoice value as that was said to represent the amount of the parts that were replaced and re-exported back to GE, USA.

       By an order dated 2.5.2006 the Commissioner specifically found that as per the LTAPSA since the assessee has declared only the differential value of the returned parts and the parts imported, 1/3rd of the invoice value of the imported parts needs to be added to arrive at the correct assessable value. Thus, it confirmed the demand made in the show cause notice.

       The appeal filed to the Tribunal was also dismissed, the Tribunal arriving at the same conclusion as the Commissioner. The Tribunal in addition found that there is no transaction value at all and, therefore, Rule 8 will have to be referred to and relied upon and a best judgment assessment was to be made.

       Finding of the Court:

       Rules 4 and 5 do not apply to the present case. There is no infraction of Rule 8 and 10.

       Result:

       Assessee’s appeal allowed.

       Revenue’s appeal dismissed.