" \n \nIN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL \n EASTERN ZONAL BENCH : KOLKATA \n \nREGIONAL BENCH – COURT NO. 1 \n \nCustoms Appeal No. 76424 of 2016 \n(Arising out of Order-in-Appeal No. KOL/CUS(AIRPORT)/SS/110/2016 dated \n11.05.2016 passed by the Commissioner of Customs (Appeals), 3rd Floor, Custom \nHouse, 15/1, Strand Road, Kolkata – 700 001) \n \n \nAPPEARANCE: \nShri Subrata Debnath, Authorized Representative for the Appellant \n \nShri O.P. Khanduja, Advocate for the Respondent \n \nCORAM: \nHON’BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) \nHON’BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) \n \nFINAL ORDER NO. 75162 / 2025 \n \nDATE OF HEARING: 23.01.2025 \nDATE OF DECISION: 28.01.2025 \nORDER: [PER SHRI K. ANPAZHAKAN] \n This \nis \nan \nappeal \nfiled \nby \nthe \nRevenue \nagainst \nthe \nOrder-in-Appeal \nNo.KOL/CUS(AIRPORT)/SS/110/2016 \ndated \n11.05.2016 wherein the Ld. Commissioner (Appeals) \nhas \nset \naside \nthe \nOrder-in-Original \nNo.KOL/CUS/ACC/AC/01/2014 dated 17.01.2014 and \nclassified the drawings and designs imported by the \nrespondent under CTH 49.06 and held the same to be \nchargeable to ‘nil’ rate of duty as per Sl. No. 263 of \nNotification No. 12/2012-Cus. dated 17.03.2012. \nCommissioner of Customs (Airport) \nAir Cargo Complex, NSCBI Airport, Dum Dum, \nKolkata – 700 052 \n \n : Appellant \n \n \n \n \n \nVERSUS \n \nM/s. IFB Agro Industries Limited \nPlot No. Ind-5, Sector-1, East Kolkata Township, \nKolkata – 700 107 \n : Respondent \n\nPage 2 of 8 \n \nAppeal No.: C/76424/2016-DB \n \n \n1.1. Aggrieved by the setting aside of the Order-in-\nOriginal dated 17.01.2014 and dropping of the \ndemands confirmed therein, the Revenue has filed this \nappeal. \n2. \nIn their grounds of appeal, the Revenue \ncontends that the classification of the goods viz. \n\"Drawings for the fluid bed for Distiller's Dried Grains \nwith Solubles (DDGS)\" as declared by the importer is \nabsolutely wrong in view of the agreement and \ncontract submitted by the importer under Rule \n10(1)(b)(iv) of the Customs Valuation (Determination \nof Value of Imported Goods) Rules, 2007. \n2.1. The submission of the Revenue is that the \nimported item pertains to a \"Pre Import Activity\" as \nreflected in the agreement of supply of ETP and DDGS. \nIt is their contention that in the present case, the sale \nand import are related to physical transfer of tangible \ngoods; the basic feature of valuation of any goods is \ndependent on its intrinsic value that may be in any \nform including drawing, design etc., whereas the \ngoods may be in tangible form and such content may \nbe intangible in nature but intrinsic in value; that in \nthis case, designs & drawings supplied in hard copies \nwere basically prints that have only copy value being \nused for giving approval with stamp and signature and \nin fact numerable such copy can be generated. Thus, \nit was inferred that the value of the drawings and \ndesigns for imported equipment was includable in the \nAssessable value of the Effluent Treatment Plant \n(ETP). The Revenue contends that in terms of \nprovisions laid down under Rule 10(1)(b)(iv) of \nCustoms Valuation (Determination of Value of \nImported Goods) 2007, since the imported equipment \nare manufactured outside India and not related to \n\nPage 3 of 8 \n \nAppeal No.: C/76424/2016-DB \n \n \n'post-import activity'; hence Customs duty was \npayable on the said imported drawings & designs, as \napplicable to Imported equipment. Accordingly, it is \ncontended that valuation of the subject consignment \nwas done in accordance with Rule 10(1)(b)(iv) of \nCustoms Valuation Rules, 2007 and the goods are \nclassifiable under CTH 84.19. Thus, the Revenue \ncontents that applicable Customs duty on the \nconsignment assessed would be 7.5% plus 2% plus \n1% plus 4% without extending the exemption under \nNotification No. 12/2012-Cus. dated 17.03.2012. \n2.2. The Revenue also contends that the Ld. \nCommissioner (Appeals) has disregarded the pivotal \npoint, to categorise the imported item under CTH \n49.06, treating it as a distinct entity with no \nconnection to any prior imported plant and extended \nthe benefit of exemption under C.B.E.C. Notification \nNo. 12/2012-Cus. dated 17.03.2012. Revenue’s \ncontention is that the imported drawings are linked to \n\"Pre Import Activity\", which is substantiated by the \npurchase agreement. Thus, it is contended that the \ndecision of the Ld. Commissioner (Appeals) to treat \nthe impugned drawings as an independent item is \nlegally and procedurally flawed. \n2.3. In view of the above submissions, the Revenue \nprayed for setting aside the impugned order passed \nby the Ld. Commissioner (Appeals). \n3. \nThe Ld. Advocate appearing on behalf of the \nrespondent submitted that the impugned goods had \nbeen erroneously classified under CTH 84.19 on the \npresumption that the goods were of ETP and value of \nthe impugned goods were to be added to the value of \nETP under Rule 10(1)(b)(iv) of the Customs Valuation \n\nPage 4 of 8 \n \nAppeal No.: C/76424/2016-DB \n \n \nRules. He submits that both these presumptions were \npatently misplaced inasmuch as, all plans and \ndrawings, for any engineering, are classifiable under \nCTH 49.06, as per the text of the said CTH. \n3.1. It is also his contention that the impugned \ndrawings were for 10 different segments of the plant \nas detailed in paragraph 3 of the Assessment Order \nand \nthese \n10 \nsegments \nwere \nto \nbe \nconstructed/manufactured/assembled/erected \nin \nIndia; these drawings were not for the goods which \nhad been manufactured by the supplier in Netherlands \nand supplied to India \n3.2. It is further submitted by the respondent that \nthe Department had erroneously proceeded on the \nincorrect premise, that since the value of the \nimpugned drawings was to be included in the \nassessable value of the equipment imported and/or to \nbe imported subsequently in terms of provisions laid \ndown under Rule 10(1)(b) (iv) of the Valuation Rules. \nThe Revenue also considered that the impugned \ngoods would classifiable under CTH 84.19 instead of \nCTH 49.06, since ETP was classifiable under CTH \n8419. The respondent submits that the above said \ncontention of the Department is clearly misplaced, \ninasmuch as the sub clause (iv) of clause (b) of Rule \n10(1) of the Valuation Rules seems to have been read \nin isolation by the Revenue. The Ld. Counsel for the \nrespondent submits that a bare perusal of the above \nprovisions clearly indicates that the inclusion of the \ncost of engineering, development, art work, design \nwork, plants and sketches can only be considered, \nwhen the same are supplied by the buyer to the \nsupplier of the imported goods. In the instant case, \nthe Agreement clearly states that the impugned \n\nPage 5 of 8 \n \nAppeal No.: C/76424/2016-DB \n \n \ndrawings were supplied by the foreign supplier namely \nM/s. Imtech Ventilex and not by the respondent to \nthem. As such, it is their plea that the application of \nRule 10(1)(b)(iv) as heavily relied by the Revenue is \nabsolutely \nmisplaced \nand \ntherefore, \nthe \nLd. \nCommissioner (Appeals) has rightly set aside the \nOrder-in-Original dated 17.01.2014 passed by the \nlower authority being ex-facie bad in law. \n4. \nHeard both sides and perused the appeal \nrecords. \n5. \nWe find that the respondent has imported \n\"Drawings for the fluid bed for DDGS\". The respondent \nclassified the imported drawings under the CTH 49.06 \nwhereas the Revenue has sought to classify the same \nunder CTH 84.19. We observe that CTH 49.06 clearly \ncovers \n\"Plans \nand \ndrawings \nfor \narchitectural, \nengineering, industrial commercial, topographical or \nsimilar purposes, being originals drawn by hand; \nhand-written texts: photographic reproductions on \nsensitized paper and carton copies of the foregoing. \n5.1. Further, the HSN Explanatory Notes to CTH \n49.06 read as under: - \n\"This heading covers Industrial plans and \ndrawings the purpose of which, generally, is to \nindicate the position and relation of partsor \nfeatures of buildings, machinery or other \nconstructions either as they exist, or for the \nguidance of builders or manufacturers in their \nconstruction (e.g., architects' or engineers' \nplans and drawings). The plans and drawings \nmay include specifications, directions, etc., \nprinted or not.\" \n\nPage 6 of 8 \n \nAppeal No.: C/76424/2016-DB \n \n \n5.2. From the above, we find that CTH 49.06 would \ncover \nplans \nand \ndrawings \nfor \narchitectural, \nengineering, industrial commercial, topographical or \nsimilar purposes, being originals drawn by hand; \nhand-written texts: photographic reproductions on \nsensitized paper and carton copies. This heading \ncovers industrial plans and drawings the purpose of \nwhich, generally, is to indicate the position and \nrelation of parts or features of buildings, machinery or \nother constructions either as they exist, or for the \nguidance of builders or manufacturers in their \nconstruction (eg., architects' or engineers plans and \ndrawings). The plans and drawings may include \nspecifications, directions, etc. printed or not. In the \ninstant case, the supplier, M/s Ventilex B. V. \nconfirmed that these drawings are original, taken print \nout from computer and solely prepared in accordance \nto the contract no. IFBFAG/PO/PROJ-CMG/2013-\n14/017 dated 09.07.2013; in other words, the \nimpugned drawings are original print outs, supplied \nseparately and not as a part of the ETP. \n5.3. We find that the impugned drawings were for 10 \ndifferent segments of the plant as detailed in para 3 \nof the impugned order. These 10 segments were to be \nconstructed/manufactured/assembled/erected \nin \nIndia & these drawings were not for the goods which \nhave \nbeen \nmanufactured \nby \nthe \nsupplier \nin \nNetherlands & supplied to India. We find that the \ncertificate issued by the Vice-President Projects \nconfirms the said fact. We find that in paragraph 6 of \nthe Order-in-Original, the Ld. adjudicating authority \nassumes erroneously that the impugned drawings \nwere for the equipment manufactured by the supplier \nin Netherlands and therefore, the value of the \n\nPage 7 of 8 \n \nAppeal No.: C/76424/2016-DB \n \n \nimpugned goods relate to the equipment imported by \nIFB. We find that the supplier, M/s Ventilex B. V. has \nconfirmed that these drawings are original, taken print \nout from computer and solely prepared in accordance \nto the contract no. IFBFAG/PO/PROJ-CMG/2013-\n14/017 dated 09.07.2013. Thus, we find that the \nimpugned drawings are original print outs, supplied \nseparately and not as a part of the ETP. Therefore, we \nhold that the import of impugned drawings and \ndesigns are related to post import activity and not \nrelated \nto \npre-import activity, as contended by the Revenue. \n5.4. We also observe that the Department had also \nerroneously proceeded on the incorrect premise, that \nsince the value of the impugned drawings was to be \nincluded in the assessable value of the equipment \nimported and/or to be imported subsequently in terms \nof provisions laid down under Rule 10(1)(b)(iv) of the \nValuation Rules, therefore, the impugned goods were \nclassifiable under CTH 84.19 instead of CTH49.06, \nsince ETP was classifiable under CTH 84.19. The above \nsaid \ncontention \nof \nthe \nDepartment \nis \nclearly \nmisplaced, inasmuch as the sub clause (iv) of clause \n(b) of Rule 10(1) of the Valuation Rules seems to have \nbeen read in isolation. \n5.5. We find that the Department had erroneously \nassessed the goods under CTH 84.19 which inter alia \ncovers,\" Machinery, plant or laboratory equipment for \nthe treatment of materials by a process involving \nchange \nof \ntemperature....\" \nThe \ngoods \nunder \nassessment are Drawings and designs and are not \nmachinery, plant or equipment and, by no stretch of \nimagination, could be classified under CTH 84.19. The \nvalue of the intellectual property contained in these \n\nPage 8 of 8 \n \nAppeal No.: C/76424/2016-DB \n \n \ndrawings is the real worth of the drawings and the \nsame has been specifically determined at Euro \n244.000 as per the Agreement dated 09.07.2013. \n6. \nThus, we find that the Ld. Commissioner \n(Appeals) has given a categorical finding and \nconcluded that the item imported viz. drawings and \ndesigns, are rightly classifiable under CTH 49.06. We \ntherefore do not find any reason to disagree with the \nreasoned findings given by the ld. Commissioner \n(Appeals) in the impugned order. \n7. \nConsequently, we uphold the impugned order \nand reject the appeal filed by the Revenue. \n(Order pronounced in the open court on 28.01.2025) \n \n \n \n (ASHOK JINDAL) \n MEMBER (JUDICIAL) \n \n \n \n (K. ANPAZHAKAN) \n MEMBER (TECHNICAL) \nSdd \n \nSd/- \nSd/- \n"