The Supreme Court has held that the services rendered by the Indian agent, Coal India were not post-importation activities. The services provided were directly relatable to the import of the goods by way of product support service which is covered by Sections 14(1) and 14(1A) of the Customs Act read with Rule 9(1)(e) of the Customs Valuation Rules.

The bench of Justice Abhay S. Oka and Justice Ujjal Bhuyan has observed that To determine the assessable value for the levy of customs duty on imported goods, Section 14 of the 1962 Act has to be read with the provisions of the  Customs Valuation Rules, 1988 because under Section 14(1) there is reference to adeemed price of goods imported and under Section 14(1-A) such deemed price is to be determined in accordance with the CVR, 1988.

The appellant, Coal India filed the appeal under Section 130E of the Customs Act, 1962 against the order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Kolkata.

The Assistant Commissioner of Customs passed order- in-original finalizing provisional assessment of bills of entry covering goods imported by the appellant and its subsidiaries under several purchase orders/contracts. Assistant Commissioner of Customs held that engineering and technical service fees/agency commission/charges paid or payable by the appellant and its subsidiaries to the local agent of the overseas supplier as reflected in the purchase order were includable in the assessable value of the imported goods (spare parts) under Rule 9(1)(a) and Rule 9(1)(e) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 read with Section 14(1)(a) of the Customs Act, 1962. 

Since appellant had failed to include such service fees/agency commission/charges in the assessable value of spare parts so imported, this resulted in a short levy of customs duty to the tune of Rs.64,47,244. Accordingly, the Assistant Commissioner of Customs directed the appellant to pay Rs.64,47,244.00 within 15 days. In view of the order, the provisional assessment stood finalized.

Coal India preferred an appeal before the Commissioner of Customs (Appeals), Kolkata. The Commissioner (Appeals) held that the present case is squarely covered within the purview of Rule 9(1)(a) and Rule 9(1)(e) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. 

Hence, the engineering and technical service fees/charges were includable in the assessable value of the imported goods. Commissioner (Appeals) confirmed the order passed by the Assistant Commissioner and dismissed the appeal.

CESTAT was of the view that payment made by the appellant to M/s Voltas Limited had no nexus to any services rendered by M/s Voltas Limited but was a condition of sale. Holding that payment made to M/s Voltas Limited had a direct nexus to the value of the goods imported, CESTAT rejected the appeal.

The court held that the view taken by all the lower authorities is correct and no interference is warranted. There is no merit in the appeal. 

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