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2016 (9) TMI 931 - AT - CustomsValuation under section 14 of Customs Act, 1962 - inclusion of royalty payable to overseas entity in the assessable value - master tapes - rule 9 of Customs Valuation Rules, 1988 (or rule 10 of Customs Valuation Rules, 2007) - rejection of declared value under rule 10A of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - transaction value - cost and services - Held that: - the case Collector of Customs (Preventive) v. Essar Gujarat Ltd [1996 (11) TMI 426 - SUPREME COURT OF INDIA] can be referred to, where the decision does not impact upon such imports which can draw a distinction between royalty on goods imported and royalty as a post-importation condition. Of particular import are the propositions that mere existence of royalty clause in a contract which also covers import of goods does not, ipso facto, mandate adjustment of transaction value. The connection with imported goods must conform to the prescriptions in rule 9 of Customs Valuation Rules, 1988 (or rule 10 of Customs Valuation Rules, 2007). It is abundantly clear from the above narration that royalty is hinged upon post-importation manufacture and not on the imported goods per se. The impugned order has erred in including the royalty amounts in the valuation of the ‘master tapes’ that were imported. Appeal allowed - decided against Revenue.
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