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2017 (4) TMI 423 - AT - Central ExciseValuation - technical know-how fee - royalty fee - M/s Bharat Apex Industries prepares the drawings as per specification of customers and due to lack of manufacturing facilities place orders on their vendors including the Appellant for manufacture and supply of heat exchanger - whether the additional consideration would form part of assessable value? - Held that: - the issue of inclusion of the value of cost of design and drawings in the assessable value is no longer res integra. In the Apex Court Judgment of Mysore Kirloskar Ltd. Vs. Commissioner of Central Excise, Belgaum [2002 (1) TMI 117 - CEGAT, BANGALORE], the Hon be Supreme Court has held that the design and drawings were not includible in the assessable value. The agreement is not merely for design and drawings but a complete contract for technical know-how, royalty, training, sales assistance, supplies and even accounting audit of M/s Bharat Apex Industries Ltd. by public accountant selected by the licensor - inclusion of consideration for design and drawings in the price of goods is proper and correct - demand with interest sustained. Royalty is payable by M/s Bharat Apex Industries Ltd. on the ex-factory sales price of the product and the same is granted to the M/s Bharat Apex Industries Ltd. for an exclusive but non-transferable license and same is being paid by M/s Bharat Apex Industries Ltd. in connection with the marketing and sale of the product as per Para 10.2 of the agreement. There is no evidence that the burden of royalty is to be borne by the appellants. Same is therefore not includible in the assessable value of the goods. The facts of the Pepsi case are entirely different as there was integral link between the obligation of the bottlers to purchase the concentrate exclusively from the assessee and use of trademark of assessee subject to payment of royalty - demand set aside for royalty. The penalty is reduced to ₹ 1,80,000/- on the basis of pro-rata value of the technical know-how and drawing and designs. Appeal disposed off - decided partly in favor of assessee.
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