COMMISSIONER OF CUSTOMS (PORT) KOLKATA Vs. STEEL AUTHORITY OF INDIA LTD.
LAWS(SC)-2020-4-63
SUPREME COURT OF INDIA
Decided on April 27,2020

Commissioner Of Customs (Port) Kolkata Appellant
VERSUS
STEEL AUTHORITY OF INDIA LTD. Respondents


Referred Judgements :-

ANDHRA PETROCHEMICALS VS. COLLECTOR OF CUSTOMS,MADRAS [REFERRED TO]
MUKUND LIMITED VS. COMMISSIONER OF CUSTOMS [REFERRED TO]
COMMISSIONER OF CUSTOMS VS. HINDALCO INDUSTRIES [REFERRED TO]
INDO GULF CORPN. LTD. VS. COMMR. OF CUSTOMS [REFERRED TO]
COLLECTOR OF CUSTOMS PREVENTIVE AHMEDABAD VS. ESSAR GUJARAT LTD [REFERRED TO]
COLLECTOR OF CUSTOMS PREVENTIVE AHMEDABAD VS. ESSAR GUJARAT LTD [REFERRED TO]
TATA IRON AND STEEL COMPANY LIMITED VS. COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS BHUBANESWAR ORISSA [REFERRED TO]
COMMISSIONER OF CUSTOMS PORT KOLKATA VS. J K CORPORATION LIMITED [REFERRED TO]
COMMNR OF CUSTOMS PORT CHENNAI VS. TOYOTA KIRLOSKAR MOTOR PVT LTD [REFERRED TO]
COMMISSIONER OF CUSTOMS VS. FERODO INDIA PVT LTD [REFERRED TO]
COMMISSIONER OF CUSTOMS,AHMEDABAD VS. M/S.ESSAR STEEL LTD. [REFERRED TO]
COMMISSIONER OF CUSTOMS, CHENNAI VS. DENSO KIRLOSKAR INDUSTRIES PVT. LTD. [REFERRED TO]
COMMISSIONER, DELHI VALUE ADDED TAX VS. ABB LTD. [REFERRED TO]


JUDGEMENT

ANIRUDDHA BOSE,J. - (1.)The dispute in this appeal relates to valuation under the Customs Act, 1962 of import of certain items made by the respondent Steel Authority of India Ltd. (SAIL) under two contracts, bearing nos. PUR/PC/MOD/08.01/Pt.II dated 31.10.1989 and UR/PC/MOD/08.01/PM dated 29th March 1990. These imports were made in connection with modernisation, expansion and modification for their plant at Durgapur in West Bengal. For this purpose, SAIL had floated seven Global Tender Contract Packages. The two contracts were part of these Tender Contract Packages. They were registered with the customs authorities for the purpose of project import benefits in terms of the 1962 Act. The first contract involved in this appeal was with a consortium consisting of a German Company, Hoestemberghe & Kluisch, GMBH and H & K Rolling Mills Engineering Private Limited, an Indian Corporate entity. The second contract was also with a German Company, Siempelkamp Pressen Systeme and the Indian entity was Escon Consultants Private Ltd, with whom the consortium was formed. Both these contracts were in connection with modernisation of SAIL's rolling mills at the aforesaid plant.
(2.)Schedule 3 of the first contract (bearing no.544-9/91A SVB) specified scope of supplies and service along with the price particulars. Extracts from that schedule appears from the order of the Commissioner of Customs being the authority of first instance, dated 3rd January 2001. This order related to the first contract. We shall refer to this order in greater detail later in this judgment. Relevant part of that Schedule is reproduced below:-Schedule No. Description Millions [I] [M]
JUDGEMENT_63_LAWS(SC)4_2020_1.JPG

In addition to this, contract price of Rs. 186,144,000/- and a royalty of Rs.10 per tonne of thermax bars produced during first five years of operation was also to be paid to the Indian entity of the consortium under the contract for supplies and services made by the latter.

So far as the second contract is concerned, the scope of supplies and services to be effected by the consortium appears from the following part of the third schedule, which again has been reproduced in the second order (bearing no.544-9/91A SVB) of the authority of first instance, dated 1st June 2001:-

JUDGEMENT_63_LAWS(SC)4_2020_2.JPG

(3.)The basic wording of the two contracts are more or less similar, Clause (c) thereof stipulates :-
"The Contractor has agreed to undertake basic and detail design and engineering, layout engineering, training services, procurement, manufacturing, shop testing, supply and delivery of the complete Plant and Equipment, materials both imported and indigenous at site and carry out installation/construction of all civil works, supervision, erection, testing and successful commissioning of the PROJECT and demonstrate the Performance Guarantees etc. for the Project under the Terms and Conditions mentioned hereinafter. The CONTRACTOR has also agreed to render the services for insurance, port clearance including stevedoring, transportation, safe custody, handling, unloading, loading, transportation to site and any other services required to complete the PROJECT under this contract."

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