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2013 (12) TMI 90 - AT - CustomsValuation of goods - Addition of Technical know how fees and royalty - Import of parts and components - Held that:- as per the agreement, the technical know-how and licence related to the post importation activities to be undertaken by the appellant. The payment consisted of two components - one a lumpsum amount payable in instalments and a running royalty - The product referred to in the agreement relates to the cars manufactured in India of specific models. From this, it becomes clear that the running royalty of 2.15% is on the goods manufactured in India and sold by Maruti and has nothing to do with the imported components. Similarly, the royalty of 3% is relatable to the indigenization programme of the appellant since it is on the “deleted portion of the CKD components”, that is, on the value of the components which have not been imported. Thus, higher the indigenization, higher the payment of royalty. This is for the reason that, had the appellant imported these components rather than manufacturing indigenously, SMC would have been able to earn profits by way of sale of imported components. There is no mention of any specific items of import or of any royalty or licence fee payable for imported goods. In this factual position, there is no legal requirement for adding the know-how fee to the value of any imported items and assessing these imported items to customs duty based on the added value as held in the case of Hyundai Motor (India) Ltd. [2007 (2) TMI 81 - CESTAT,NEW DELHI]. Technical know-how fee charged in respect of post importation activities can not be included in the assessable value of the imported goods as held by the Hon’ble Apex Court in the of Prodelin India (P) Ltd. [2006 (8) TMI 186 - SUPREME COURT OF INDIA]. No efforts has been made by the Department in the instant case to ascertain whether there was a price adjustment between the cost incurred by the appellant on account of royalty/licence fee and the price paid for imported items. The department has merely relied on the consideration clause in the Licence agreement only without establishing the fact that what was termed as royalty/licence fee was in fact not such royalty/licence fee but some other payment made or to be made as a condition pre-requisite to the sale of imported goods. The onus is on the Revenue to prove that the declared price did not reflect true transaction value. In the absence of any reliable evidence in this regard, the contention of the Revenue that royalty/licence fee is includible in the assessable value of the imported goods can not be accepted - Decided in favour of assessee.
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