Per A.K. Srivastava : The appeal is at the instance of the Revenue. The challenge is against the order passed by the Commissioner (Appeals) dated 9.1.2002. The issue arising for consideration is whether lump sum payment of Swiss Francs 9,89,000 payable as consideration for consultancy and engineering services rendered by M/s. Holder Bank Management and Consultancy Ltd., Switzerland (referred to as HMC for the purpose of brevity) is required to be added to the invoice value of the capital goods, raw materials, etc. imported by the appellants under Rule 9 (1) (c) of the Customs Valuation Rules, 1988.

2. The facts giving rise to this Appeal filed by the Revenue, being aggrieved by the Order-in-Appeal, are that the appellants entered into an agreement with HMC for Consultancy and Engineering Services in the realization of the project, for which lump sum payment of Swiss Francs 9,89,000 was paid by the respondents. In terms of clause 1.2 of the agreement, HMC provided consultancy services in the areas of plant design, production and manufacture techniques. The nature of the services provided were in the areas of preparation of technical concept to meet state-of-the-art technologies, case of operation and maintenance, recommendation for selection and ordering of equipment, supervision of design for preparation of final general arrangements, drawings, supervision of suppliers design drawings, quality assurance of imported equipment, quality inspection for site manufacturing of equipment and erection, supervision of commissioning/post commissioning assistance jointly and in close collaboration with an Indian Company, M/s. Holtec Engineers Pvt. Ltd. (for brevity called as Holtec).

3. The Adjudicating Authority examined the above agreement and held that no loading was required to be done since firstly both supplier and importer were not related person in terms of the definition of the related persons contained in Rule 2 (2) of the Customs Valuation Rules, 1988 and secondly, there was no case for addition of technical know-how payment to the invoice value under Rule 9 (1) (b) (iv) of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, as HMC has only provided consultancy services. They neither designed the imported equipments nor supplied the engineering drawings for the manufacture of the imported equipments. The Indian Company, Holtec were also not equipment designers. Such equipment designs were entirely left to the machinery suppliers and the technical know-how and engineering services as referred to in the agreement between the HMC and M/s. Jaypee Bela Cement, the respondents herein (in short JBC) are not related to the equipment designs but are for the purpose of preparation of tender documents and for recommendations for selecting the equipments. The consultancy for the JBC was rendered jointly and in close collaboration between HMC and Holtec with Holtec to perform the lead role and ensure that a complete integrated technical consultancy is provided to JBC. As per the "scope of services". Holtec were to approve drawings submitted by the suppliers both Indian and foreign but excluding drawings pertaining to equipment designs supplied by the supplier. Thus, HMC did not contribute in any manner towards design of the imported machinery from the foreign suppliers.

4. The principal contentions raised in the Revenue's appeal are that:

(i) In view of the Hon'ble Supreme Court in the case of M/s. Essar Gujarat Ltd. - 1996 (17) RLT 587 (SC)=1996 (88) ELT 609 (SC), payments made to HMC will have to be included in the assessable value of the imported goods.

(ii) the case is covered by Rules 9 (1) (b) (iv), 4 read with 9, 10 of the Customs Valuation Rules, 1988 and applying these Rules, the purchase of goods cannot be disassociated from the agreement for supply of services in relation to design/manufacture/fabrication of the goods and was essential for the manufacture of the goods.

(iii) Although seller has not incurred a