TMI Blog2023 (7) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... cence fee paid is a condition of sale of the goods. The Hon ble Apex Court in the case of COMMISSIONER OF CUSTOMS VERSUS M/S FERODO INDIA PVT. LTD [ 2008 (2) TMI 12 - SUPREME COURT ] had occasion to analyse the very same issue and has held that the decision in Essar Gujarat Ltd. [ 1996 (11) TMI 426 - SUPREME COURT] is not applicable - The Tribunal in the case of Remy Electricals India Ltd. [ 2017 (6) TMI 32 - CESTAT CHENNAI] has followed the decision of Hon ble Apex Court in Feroda India Pvt. Ltd. [ 2008 (2) TMI 12 - SUPREME COURT] to hold that the licence fee cannot be included to the transaction value when the same is not a condition of sale. The order passed by the Commissioner (Appeals) does not require any interference. The appeal filed by Department is dismissed. - CUSTOMS APPEAL No. 40973 OF 2013 - FINAL ORDER No. 40546/2023 - Dated:- 11-7-2023 - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) Ms. Anandalakshmi Ganeshram, Superintendent (A.R) - For the Appellant Mr. Rohan Muralidharan, Advocate - For the Respondent ORDER Brief facts are that the respondent is engaged in the manufacture of Wind Turbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... License fee will be invoiced and charged by Licensor on confirmation of WTG commissioned on a quarterly basis. Licensee shall provide this information on a monthly basis to Licensor in a mutually agreed and prescribed manner.... (emphasis added) 4. It is argued by the Ld. A.R that from the agreements, it can be seen that the import of the components of the Wind Mill System is of no use to appellant unless the technical know-how of assembling and installation and manufacture of wind mill is also obtained by the appellant. Thus the License Fee is nothing but a condition of sale of the imported items though not specifically mentioned in the agreement. The decision of Hon'ble Apex Court in the case of Collector Vs Essar Gujarat Ltd. -1996 (88) ELT 609 (SC) relied. Ld. A.R also argued that there has been amendment of the Rules. An Explanation has been added to Rule 10 (1) (c) of CVR2007 which was not available in earlier Rule 9 (1) (c) of the Rules. Ld. A.R prayed that the appeal may be allowed. 5. Ld. Counsel Sri Rohan Muralidharan appeared and argued for the respondent. 6. It is submitted that for the purpose of manufacturing WTGs, the respondent imports va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to its related party suppliers is not related to imported goods and cannot be added to the invoice value. 8. Subsequently, the review of OIO dt. 30.03.2007 was taken up. While so, M/s. NEG Micon AS Denmark merged with respondent and the name of the respondent also changed to M/s. Vestas Wind Technology India Private Limited. However, the subsidiary status of the respondent was not changed. NEG Micon and the respondent terminated the technical assistance agreement vide an agreement dated 8.2.2007. Thereafter, the respondent (Licensee) entered into new License Agreement dated 09.02.2007 with Vestas Denmark (Licensor). As per this license agreement the licensor is the sole owner of the technology pertaining to manufacture of V82 models of WTG and the licensee had procured the right to use the technology for assembly and construction of V82 WTGs. For the use of technology and the ongoing technical support, the licensee would pay licensee fee to the licensor. Clause 4 of the License Agreement provides for payment of license fee. The relevant part of agreement read as under : 4. LICENCE FEE - 4.1 As consideration for the license and the rights granted to Licensee here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the transaction value. ld. Counsel prayed that the Revenue appeal may be dismissed. 12. Heard both sides. 13. The issue that arises for consideration is whether the licence fee has to be added to the transaction value for discharge of customs duty. 14. The arguments put forward by the department are two fold. Firstly, an Explanation has been added to Rule 10 (1) (c) of CVR 2007 and therefore there is a change in the provisions of law. Secondly, that new licence agreement has been executed in 2007 and for these reasons, there is change of circumstances. The relevant part of the License agreement has been already noticed. It shows that the payment of licence fee is for each WTG commissioned. Thus, it cannot be said that the licence fee is a condition of sale of the parts and components imported by appellant. The Explanation of Rule 10 (1) (c) was considered by the Tribunal in the case of Brembo Brake India Pvt. Ltd. Vs Commissioner of Customs (Imports), Mumbai-2014 (302) ELT 551 (Tri.-Mumbai) . Relevant part reads as under : 7 . We have carefully considered the submissions and perused the records. The department has sought to load royalty relating to the techni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n value. Commissioner (Appeals) after taking note of the new licence agreement as well as the amendment brought forth by adding Explanation to Rule 10, held as under : Notwithstanding the above, it requires to be seen whether the technical licence fee is addable to the invoice value in terms of Rule 10 (1) of the above said Rules even if there is no waiver for payment Further in respect of import of V 82 WTG model, the question of addition of royalty was examined at the original stage, 1st appeal stage and 2nd appeal stage. The Hon ble CESTAT, New Delhi vide its Order No.425 04 NB (A) dated 13.5.2004 held that Licence Fee is not addable in terms of the then Rule 9 (1)(c) of the Customs Valuation Rules, 1988. It is seen that the Board vide its Communication No. F.No.383/96/04 JC dated 4.8.2004 has accepted the above said order of the Hon ble Tribunal, New Delhi. The perusal of the licence Agreement dated 20.7.2010 reveals tat it is related to V 100 WTG Model. There is no scope in the Agreement to infer any condition of purchase of raw materials / components from the provider of the Technology. In fact, the Agreement does not mention anything about the supply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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