Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2017 (4) TMI 204

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... clearly not satisfied, we find absolutely no justification for such loading of invoice value by the royalty amount. The consultancy charges are not to be included to the invoice values for import of the goods as product consultancy charge which has got nothing to do with the imported goods. Appeal allowed - decided in favor of appellant. - Customs Appeal No. 52921 of 2015 - Final Order No. 52659/2017 - Dated:- 31-3-2017 - Hon'ble Ms Archana Wadhwa, Member (Judicial) And Hon'ble Mr. V Padmanabhan, Member (Technical) Shri Tarun Gulati, Shri Nikhil Gupta, Shri Ankit Sachdeva, Advocates for the Appellants Shri Govind Dixit, AR for the Respondent ORDER Per V Padmanabhan The present appeal is against the o .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... y the Commissioner (Appeals) vide present impugned order. Aggrieved by the impugned order, the present appeal has been filed. 3. With the above background, we heard Shri Tarun Gulati, Shri Nikhil Gupta, Shri Ankit Sachdeva, learned Advocates appearing for the Appellants and Shri Govind Dixit, learned AR for the Revenue. 4. The main grounds of appeal are summarized below:- (i) There is no justification for loading the invoice values, for the royalty paid by the appellants to the foreign suppliers since such payments of royalty has not been paid as part consideration for the imported goods. The lower authorities have confirmed the loading for royalty on the basis of decision of Hon ble Supreme Court in the case of Matsushita Televi .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... rice actually paid or payable for the imported goods, - (a) the following to the extent they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods, namely:- (i) commissions and brokerage, except buying commissions; (ii) the cost of containers which are treated as being one for customs purposes with the goods in question; (iii) the cost of packing whether for labour or materials; (b) The value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of imported goods, to the extent that such value has not been i .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ct that such goods may be subjected to the said process after importation of such goods. 8. It is to be noted that only those royalty license fees are required to be added to the invoices wherein the payments are made as a condition of the sale of goods being imported and also subject to the condition that such royalty is included in the price actually paid or payable. 9. We have gone through the relevant agreement for payment of royalty. In terms of Article 2 of the agreement, the appellant is required to pay the license fee of 0.5 % of the appellant s sale revenue from products. Art.2 Granting of the license Subject to a fee, LICENSOR hereby grants LICENSEE for the duration and in the scope of Art.3 of this Agreement a g .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... pra) has distinguished the case of Matsushita Television Audio (India) Ltd. (supra) as follows:- In the case of Matsushita Television (supra) the pricing arrangement was not produced before the Department. In our view, the Consideration Clause in such circumstances is of relevance. As stated above, pricing arrangement and TAA are both to be seen by the Department. As stated above, in a given case, if the Consideration Clause indicates that the importer/buyer had adjusted the price of the imported goods in guise of enhanced royalty or if the Department finds that the buyer had misled the Department by such pricing adjustments then the adjudicating authority would be justified in adding the royalty/licence fees payment to the price of .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... appellant is under obligation to avail such services. Consequently, it has been held that payments for the services is to be made as a condition of sale of the imported goods. 13. On a perusal of the relevant service agreement dated 21.12.2011, we observe that the appellant is required to pay the principal in Hong Kong for various corporate services, such as coordination, support accounting, consultancy, marketing and sale support etc. It emerges on perusal of the agreement that the services are completely independent of the import of goods by the appellant. Consequently, there is no justification for such loading of the invoice value. Similar views has been expressed by the Tribunal in several other cases including the case law cited b .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates