Full Judgment
Subsequently, proceeding were initiated and the Commissioner passed an order holding that 11 volumes of technical information are liable to customs duty under Customs Tariff Heading 1491. A differential duty demand of over Rs. 1 crore was confirmed against the appellants. When matter came before this Tribunal in appeal, it took the view that the rate of duty applied was incorrect and that the value of the 11 volume was also required to be re-worked. Accordingly, the matter was remitted to the original authority under Final Order No. 198/2003-NB(A), dated 7-5-2005. Both the parties did not file any appeal against this order.
Thus, this order became final.
2. In the remand proceedings, the Commissioner held that upon application of correct rate of duty and revaluation of the goods, duty payable would be about Rs. 32.5 lakhs. The present appeal has been filed against that order.
3. The contention of the appellants is that the valuations carried out by the Commissioner is incorrect for two reasons. The first is that the Commissioner wrongly took into account the technology cost for 14" picture tubes. The second is that the allocation made under different headings is incorrect.
4. On the first question, the contention of the appellants has been that, even though 2 volumes under import related to 14" colour picture tubes the collaboration agreement in regard to that picture tube manufacture did not materialise and that the appellants made no payment towards technology for that variety of picture tube. It was submitted that since the contract was not effectuated, the 2 volume had no commercial value and the collaboration between the parties was settled without any payment. The Commissioner did not accept this contention and half the value of the agreement for 14" picture tube has been taken towards these 2 volumes.
4.2 With regard to the agreement for the other two picture tubes in regard to which collaboration fructified, it has been the contention of the appellant that the total payment of US $ 1 million is to be apportioned among various obligations including licence for industrial property rights, technical information assistance and imparting of technical know-how. Reliance has been placed on the decision in the case of Prerna Textile - 2000 (117) E.L.T. 241 and the judgment of the Supreme Court in the case of Associated Cement Company - in support of the contention that such an 5. With regard to penalty, the submission of the learned Counsel is that the Appellant had deposited the amount of Rs. 10 lakhs on 17-1-2001 well before the issue of show cause notice dated 21-7-2001.
It is being contended that no penalty is imposable in view of the decision of this Tribunal in the case of Rational Business Corpn. v.C.C., Delhi 6. Learned SDR has taken us though the agreement and contended that the Commissioner has correctly interpreted the collaboration agreement and made appropriate allocations. He has also submitted that since the assessment to customs duty is in terms of value of goods at the time of import, the 2 volumes relating to 14" picture tube were also required to discharge duty, inasmuch as subsequent abandoning of collaboration in regard to 14" picture tube made no difference to the value of the imported volumes at the time of import. In regard to penalty, the submission of the learned SDR is that since the Tribunal has upheld the order of the Commissioner on the issue of penalty and that order having become final, it is not open to the appellants to challenge the imposition of penalty.
7. We have perused the collaboration agreements with great care. The payment of US$ 1 million was towards the transfer of 20" and 21" picture tube technology. The agreement fixed the payment towards 14" picture tube at U.S.$ 5,00,000/-. However, the 14" picture tube collaboration did not effectuate at all and it is not in dispute that the appellants made no payment towards that part of the technology transfer agreement. The two volumes by themselves had no value, inasmuch as transfer of technology cannot take place through transfer of those volumes. Much more in the nature of visits of experts, and detailed exchanges of data and information and experience were necessary. Therefore, the appellant's contention that these volumes had no commercial value merits acceptance. The appellant's submission that total cost of U.S. $ 1 million should be allocated among the various relevant heads also merits acceptance. The role of each of these elements is clearly reflected in the agreement. However, since the cost of each of these elements is not separately stipulated in the agreement, a broad allocation of costs among the various elements would be appropriate. In the case relied upon by the appellant, the allocation of 1/3 cost towards drawings has been approved by the Tribunal and the Supreme Court. It is being submitted that if 1/3 of U.S.$ 1 million, is apportioned, the duty payable by the appellant on the drawings would be Rs. 14.47 lakhs. We confirm the duty demand to this extent and set aside the remaining amount of duty demand.
8. With regard to penalty, the learned SDR is right in his contention that the requirement for imposition of penalty has become final and only quantum is open to consideration. In the facts of the present case we are of the view that a penalty of Rs. 1 lakh would be sufficient.
Accordingly, the penalty is reduced to this amount.
9. In the result, the appeal is partly allowed by reducing the duty demand to Rs. 14.47 lakhs and penalty to Rs. 1 lakh. The payment already made by the appellant shall be adjusted towards duty and penalty confirmed in this order. The appeal is disposed of in the above terms.