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2012 (11) TMI 571 - AT - CustomsRoyalty to foreign collaborators towards transfer of Technical Know-How - direction for addition with the transaction value to arrive at the assessable value of the goods in importation - Held that:- Persuing the licence agreement entered into by the appellant with the foreign collaborator it is seen that the foreign collaborator (Licensor) grants the Licensee (the appellant) a non-exclusive, non-permissible license technology to manufacture and to sell or otherwise to supply the licenced products. In consideration thereof the appellant has to pay the royalty to the Licensor as the percentage of the net sale price of the licence products in the Indian market. Nowhere in the agreement is there any condition that the appellant is required to import any components from the licensor. In fact, in 7 of the agreements there is no condition at all with respect to import/purchase of any components from the foreign collaborator. The appellant is free to import the components either from the collaborator or from anybody else. If that be so, the condition that the payment of royalty is relatable to the imported goods and is a condition for sale of goods cannot be sustained in law. The appellant is liable to pay royalty to the foreign collaborator even when the appellant imports the components from anybody else and do not at all import the components from the foreign collaborator. Thus there is no nexus between the royalty payment and the import of components. There is no evidence which has been produced by the department indicating that the payment of royalty is a condition for the sale of imported components or it is relatable to the imported components. Thus the contention of the Revenue that the royalty amount is to be added with the transaction value to arrive at the assessable value of the goods in importation is rejected - in favour of assessee.
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