Aniruddha Bose JUDGMENT
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 PUR/PC/MOD/08.01/Pt-I 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:
(quoted from the order in verbatim)
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:
(quoted from the order in verbatim)
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