2018 (10) TMI 1482 - AT - Customs

Valuation of imported goods - inclusion of value of know-how license and rights in the assessable value of the goods imported under EPCG scheme - primary defence of the appellant is that technology know-how is merely documentation which has been imported as goods and should be assessed as goods - Revenue neutrality.

Held that:- The technology know-how license agreement is essentially an agreement that permits the appellant to use the Spool Technology (VFY). The machinery imported by them is essentially a machinery which uses Spool Technology and the said machine cannot be used without a license to use the said ‘Spool Technology’.

The facts are akin to the facts in the case of Essar Gujarat Ltd. [1996 (11) TMI 426 - SUPREME COURT OF INDIA]. In the said case, like in instant case, the fee was for right to use the technology embedded in the capital goods. In both cases it was paid to a third party. In both the cases plant could not be made operational without license to use the technology. From the above it is apparent that these may be no express condition to pay for the license know how while purchasing the goods but there is an implicit condition in the facts of the case as the goods cannot be used without a license to use the technology in built into it. Thus, relying on the decision of Hon’ble Apex Court in the case of Essar Gujarat Ltd. the appeal not maintainable on merit.

Revenue neutrality - Held that:- The credit would not be available immediately but over a period as the goods are not inputs but capital goods. Thus, this does not result in an revenue neutral situation. Moreover, the liability to pay would arise at the time of import but the said credit can be used only after the plant is installed and production starts. Thus, it is not a revenue neutral situation.

Appeal dismissed - decided against appellant.