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2024 (3) TMI 874 - CESTAT CHENNAIValuation of imported goods - rejection of declared value - Inclusion of lump sum and periodical patent and technology know how fee paid by appellant to the foreign company in the transaction value - order passed by Commissioner (Appeals) remanding the matter to the adjudicating authority to reconsider the rejection of transaction value is legal and proper or not. Whether the lump sum and periodical patent and technology know how fee paid by appellant to the foreign company has to be included in the transaction value is legal and proper? - HELD THAT:- As per Rule 10 (1) (c), the payment in the nature of royalty or technical know how must be a condition pre-requisite for the supply of imported goods by the foreign supplier. The royalty or technical know-how fee is to be included, if directly or indirectly it is a condition of the sale of imported machinery. The department therefore has not only to look whether there is payment of royalty or technical know how fee, but also have to examine the pricing arrangement agreed by the parties. Only if the royalty and technical know how fee is paid as a condition of sale of the machinery, it can be added to the transaction value. In the present case, there are nothing stipulated in the agreement that payment of royalty and technical know-how fee is a condition of sale of the imported machinery. The department has not been able to adduce any evidence in this regard. The Hon’ble Apex Court in the case of COMMISSIONER OF CUS. (PORT), CHENNAI VERSUS TOYOTA KIRLOSKAR MOTOR P. LTD. [2007 (5) TMI 20 - SUPREME COURT] had occasion to analyse the very same issue in regard to erstwhile Rule 9 (1) (c) of Customs Valuation (Determination of Price of Imported Goods), Rules, 1988. It was held that royalty and technical know how fee must be payable by the importer as a condition of import and that a distinction clearly exists between the amount payable as a condition of import and the amount payable in respect of the manufacturing activity. The royalty and technology know how fee being not a condition of sale, is not to be included in the transaction value. The issue is held in favour of the appellant. Whether the order passed by Commissioner (Appeals) remanding the matter to the adjudicating authority to reconsider the rejection of transaction value is legal and proper? - HELD THAT:- From the order passed by the adjudicating authority, it is found that in the operative portion of the order, it is stated that the ‘transaction value is rejected’. However, there is no discussion or re-determination of transaction value. The original authority has assumed that for loading the royalty and technology know how fees, the transaction value has to be rejected. The department has filed appeal before the Commissioner (Appeals) against this order of adjudicating authority contending that if the transaction value is rejected, the same ought to have been redetermined by the original authority which he has not done. The Commissioner (Appeals) in internal page 5 of the impugned order has discussed this issue and observed that once the transaction value has been set aside, it is for the adjudicating authority to redetermine the same. For this limited purpose, the matter has been remanded by him. The finding of the original authority rejecting the transaction value is patently erroneous. The department does not dispute the transaction value declared by importer and the only issue is as to whether the patent and technical know how fee is to be loaded to the transaction value. There is no requirement to remand the matter for this purpose so as to redetermine the transaction value as there is no grounds stated for rejecting the transaction value. The declared transaction value is upheld. The order for loading the royalty and technology know how fee to the transaction value is set aside. Appeal allowed.
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