- (1.) A short question which arises for determination in these civil appeals filed by the Department under Section 130-E of the Customs Act, 1962 against the decision of Customs Excise and Gold (Control) Appellate Tribunal ("the Tribunal") dated 4.7.2002 is: whether technical and installation fee amounting to Rs. 59 lacs was required to be loaded in the assessable value of a 20-Lane Bowling Alley equipment imported in October, 1998 by the assessee-Galaxy Entertainment (I) Pvt. Ltd.
(2.) The assessee imported 20-Lane Bowling Alley from M/s AMF Bowling Inc. based in USA for installation in their premises situated at Phoenix Mills Compound, Lower Parel, Mumbai-400013. On 18.5.1999, a show cause notice was issued in which it was alleged that the assessee had grossly undervalued the said equipment by declaring the price at US $ 15000 CIF as against the normal price of US $ 30000 for a lane. According to the show cause notice, the assessee had disguised part of the cost of the equipment as Technical and Installation Fee which was payable to the subsidiary of the foreign supplier, M/s AMF Bowling (I) Pvt. Ltd., amounting to Rs. 59 lacs payable over a period of three years. According to the show cause notice, prior to the importation of the above equipment, similar equipment was imported into India during 1997-98 by nine different assessees. According to the show cause notice, in those nine cases the value of the equipment worked out to US $ 30000 per lane. Consequently, according to the Department, the said equipment, in the present case, stood undervalued, hence, liable to confiscation subject to payment of redemption fund.
(3.) The demand was confirmed by the Adjudicating Authority. It was held by the Adjudicating Authority that the declared price at the rate of US $ 15199 per lane was highly discounted price and there was no reason for granting discount of 45% to the assessee. According to the Adjudicating Authority, the said equipment was undervalued and it was further disguised under what is called as technical and installation fees paid at the rate of Rs. 5.90 per game for one million customers of the assessee over a period of three years. That agreement was dated 20.8.1998. The Adjudicating Authority arrived at the figure of Rs. 59 lacs on the aforestated basis and included the said amount in the assessable value of the equipment. The Adjudicating Authority came to the conclusion that the cost was artificially divided with the intention of evading payment of customs duty. In the circumstances, the Adjudicating Authority held that the transaction value under Rule 4(1) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 ("Customs Valuation Rules") cannot be taken and accordingly, the Adjudicating Authority invoked Rule 5(1)(c) of the Customs Valuation Rules and called upon the assessee to pay duty on the price calculated at the rate of US $ 30000 x 20 + Rs.1.41 lacs per lane as Installation Charges, which M/s Capital Leisure Pvt. Ltd. had paid, amounting to Rs. 28.33 lacs.;