TMI Blog2014 (12) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts manufactured and sold with the trade-mark which clearly means that the licence fee is being paid by the appellant for use of the trade-mark for manufactured goods. There was no condition of sale that the appellant is required to pay this royalty on the imported goods. Royalty paid by the appellant @ 12% on the sale value of the manufactured goods is not required to be loaded on the invoice price of the raw material.- Decided in favour of assessee. - C/87285/2013-Mum - Final Order No. A/1110/2014-WZB/C-I(CSTB) - Dated:- 26-6-2014 - Shri Ashok Jindal, Member (J) and P.K. Jain, Member (T) Shri Jhamman Singh, Advocate, for the Appellant. Shri Navneet, Addl. Commissioner (AR), for the Respondent. ORDER The appellant is in appeal against the impugned order wherein their declared transaction value has been rejected and loading of 12% on the invoice value has been ordered by the ld. Commissioner (Appeals). 2. The brief facts of the case are that the appellant is importing goods from the related supplier outside India. On 6-2-2009 (as the imports are being made from the related supplier), the matter was referred to SVB and it was ordered that the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Rule 10(1)(c) of Customs Valuation Rules, 2007, there is no pre-condition of sale of the imported goods to pay royalty as per the agreement. Therefore, the loading of 12% on the transaction value is unjustified as per the decision of the Tribunal in the case of Tata Yutaka Autocomp Ltd. - 2013 (294) E.L.T. 467 (T-Mum) and Bridgestone India P. Ltd. - 2013 (292) E.L.T. 403. 6. On the other hand, ld. AR opposed the contention of the ld. counsel and supports the impugned order. He submitted that being a related person, the value has to be determined as per Rule 3 of Customs Valuation Rules, 2007 and he has not satisfied the condition 3(b) of the said Rules. Therefore, the value of royalty paid by them i.e. 12% on the invoice price is required to be added in the invoice value. 7. Heard both sides. Considered the submissions. 8. As no royalty or value of any amount over and above the invoice price has been paid by the appellant for finished goods and capital goods to the related supplier, and there is no finding of the Adjudicating Authority that the price of the said goods have been influenced being a related person. Therefore, we hold that the loading of 12% on capital goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price for the imported goods and the royalties/licence fees which are also paid to the foreign supplier. Rule 9(1)(c) stipulates that payments made towards technical know-how must be a condition pre-requisite for the supply of imported goods by the foreign supplier and if such condition exists then such royalties and fees have to be included in the price of the imported goods. Under Rule 9(1)(c) the cost of technical know-how is included if the same is to be paid, directly or indirectly, as a condition of the sale of imported goods. At this stage, we would like to emphasise the word indirectly in Rule 9(1)(c). As stated above, the buyer/importer makes payment of the price of the imported goods. He also incurs the cost of technical know-how. Therefore, the Department in every case is not only required to look at TAA, it is also required to look at the pricing arrangement/agreement between the buyer and his foreign collaborator. For example if on examination of the pricing arrangement in juxtaposition with the TAA, the Department finds that the importer/buyer has misled the Department by adjusting the price of the imported item in guise of increased royalty/licence fees then the adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereof, the Licensee shall pay to the Licensor during the term of this Agreement royalties at the rate of three percent (3.0%) on Net Sales Value of the Rubber Products. The royalties shall be computed semi-annually on the basis of the Net Sales Values of the Rubber Products manufactured and sold by the Licensee during each calendar half year period. 7.1 Similarly, clause 3.1 of the Trademark Licence Agreement dated 1-4-2005 deals with payment of licence fee and reads as follows : 3.1 : In consideration of the rights and licenses granted hereunder, the Licensee shall pay the Licensor as a license fee (hereinafter called the License Fee ), one percent (1.0%) on the Net Sales Value of the Rubber Products bearing BSJ Trademarks manufactured and sold by the Licensee. 7.2 A reading of the above clauses makes it absolutely clear that the royalty has to be paid @ 3% on net sale value of the rubber products manufactured and sold by the Licensee in India. Similarly, licence fee has to be paid @ 1% of the net sale value of the rubber products manufactured and sold by the Licensee bearing the trade mark. In other words, these payments are liable to be made in respect of the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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