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2015 (11) TMI 1460 - AT - CustomsValuation of goods - Inclusion of royalty in assessable value of goods - Inclusion of lump sum fees paid/payable by the appellant to Renault under the Technical Assistance and Engineering Services Agreement - Held that:- when the Agreement terminated after production of 51000 vehicles, how the royalty would be payable in terms of the Agreement. It is also not the case of Revenue that royalty was paid in respect of 51000 vehicles. The Commissioner has clearly not understood the plain language of the Agreement and has come to a conclusion that the royalty becomes due and payable and is therefore includible. This part of the demand is clearly unsustainable. - royalty is related to the spare parts manufactured by the appellant and has no relation to the parts imported by the appellant. The Commissioner has not even discussed this issue. However, since the Commissioner has set aside the Order-in-Original which had held that such royalty is not includible, we find it necessary to give our decision on this issue. We hold that the royalty on spare parts manufactured is not includible while arriving at the assessable value. Agreement provides for increasing localization of indigenous parts to reach a level of 50% by value of total imported parts and components. Therefore, it cannot be said that the lump sum payment is a condition of the sale of imported goods when the Services Agreement provides for local sourcing and procurement. - Exhibit-I to the Services Agreement titled as "Description of Services” which is reproduced at page 14. The purpose of this document is stated to include services for localization of parts. The Resources for localization plan are to be shared between Renault and the appellant (para 2.1.3 of Exhibit). Para 3.1.5 of the Services Agreement provides for training of company personnel. All these activities are nowhere related to import of parts. Payment for such activities cannot be included in transaction value under Section 14. Value shall be the transaction value. The second part is that the transaction value shall include engineering, design work, royalties and license fees, as specified in the Rules made. The Rules are the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Under these Rules, transaction value shall be accepted subject to certain restrictions specified in paras 2(a) to 2(d) of Rule 3. In the present case, the restrictions do not apply. We find that in the present case Revenue has not put forth any evidence to demonstrate that the invoice prices are not the real prices. Neither has it adduced any evidence to show that part of the invoice price was passed off as the lump sum payments for services provided. Coming to the second part of the law laid down in Section 14 of the Act, we find that certain additions to the value, as laid down in the Rules, are mandatory. If the importer cannot demonstrate the value of identical goods or deductive value of identical goods, or computed value of identical goods it is because there are no such identical goods. In these circumstances the onus does not shift to the importer to prove that the declared value is not the transaction value under Section 14. In such cases it is for Revenue to come up with good evidence to reject the transaction value. Revenue has no evidence to reject the transaction value, but has only resorted to Rule 10. We have already held above that, even in terms of Rule 10, the lump sum payment is not liable to be included in the price of the imported goods. - Decided in favour of assessee.
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