Harish Chander, Member (J)

1. The Collector of Customs, Bombay, has filed an appeal being aggrieved from the order-in-appeal No. 3119/88 BCH, dated 23-8-1988 passed by the Collector of Customs (Appeals), Bombay.

2. Briefly, the facts of the case are that M/s. Modi Xerox Ltd., the respondents, are manufacturers of xerox machines and the company was promoted as a result of joint venture agreement entered between M/s. Indian Reprographics Systems and M/s. Rank Xerox U.K. for the manufacture of xerox machines. M/s. Rank Xerox hold 40% of the paid up capital of the company. There is also technical agreement between M/s. Rank Xerox and M/s. Modi Xerox and in terms of the agreement, M/s. Modi Xerox have to pay a lump sum fee of Rs. 87.87 lacs towards supply of know how and fee of Rs. 43.63 lacs as engineering fees for ancillary development. Modi Xerox had further agreed to pay royalty at the rate of 5% to M/s. Rank Xerox towards technical assistance, grant of licence and to furnish improvements during the tenure of the agreement. Modi Xerox are also importing raw material viz. components, consumables and capital equipment from M/s. Rank Xerox and its associates. Due to the financial an