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2019 (7) TMI 778 - AT - CustomsValuation of imported goods - inclusion of royalty charge and franchisee fees paid to the foreign supplier in assessable value - Rule 10(1) and Rule 10(1)(e) of the Customs Valuation (Determination of Value Imported Goods) Rules, 2007 - HELD THAT:- From the perusal of the Customs Act and the Valuation rules, it is evident that only if royalty payable is for pre-importation activity, as a condition of sale from the supplier to buyer then only it is to be added for the purpose of calculation of Customs duty in terms of Rule 10(1)(c ) of the Customs Valuation Rules read with Section 14 of the Customs Act. A perusal of the agreement along with side letter indicate that the franchise/royalty fee is paid for provisions of management, consultation, advice service and training provided to the appellant in connection with use of Body shop products and the proprietary Marks of M/s Body shop. The condition of payment of the royalty, which is contingent upon the volume of sale in the domestic market after importation of the goods has no connection with the import of goods. Once the goods have been cleared from the Customs area the same is not required to be treated as imported goods and all the activities of the management, consultation etc. is relatable to the goods which is ceased to be imported goods in terms of the Customs Act, 1962. While a large number of consignments which has been adjudicated upon in the impugned order, is provisionally assessed and the Commissioner has ordered the finalization thereof in terms of Section 18 of the Customs Act, but also imposed a penalty of equivalent amount under Section 28(4) of the Customs Act. This is clearly not permissible as per Section 18 of the Customs Act, on the ground that the relevant date for payment of duty has yet to arrive after finalization of the assessment by the proper officer in terms of the impugned order. Similarly, in case of demand pertaining to the Bills of Entry which has been finally assessed has not been re-determined by any assessment and also not permissible without filing appeal against the assessment order. Time Limitation - HELD THAT:- It is on record that earlier show cause notice has been issued to the appellant on the similar set of facts and circumstances and in respect of same agreement and side letters. The case was adjudicated upon and the same was settled by the order of Settlement Commission dated June 2014. This indicates the fact that both the department and the appellant were aware of the entire fact regarding non-inclusion of royalty/franchise fee in the assessable value for the purpose of payment of customs duty - when the facts are known to both the parties there cannot be any suppression of facts requiring invocation of extended period of limitation. Appeal allowed - decided in favor of appellant.
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