TMI Blog1986 (12) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... as also proportional representation on the Board of Directors of Maruti. (2) Licence Agreement :- Under this Agreement, Maruti acquired the right and technical know how to manufacture cars and their components in India to the patents, designs and specifications of Suzuki on payment of lump sum royalty of $ 24/- lakhs plus 3% running royalty. (3) Purchase and Supply Agreement :- This Agreement related to import of SKD/CKD packs and complete vehicles from Suzuki, Japan. In the background of royalty payments, the Assistant Collector loaded the invoice prices of SKD/CKD packs and complete vehicles imported by Maruti from Suzuki by 1%, for the purpose of assessment of customs duty. In appeal, the Collector (Appeals) held that the loading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. We will examine the rival contentions in the succeeding paragraphs. 4. It is, no doubt, correct that Suzuki held 26% shares in Maruti and, for that reason, had a proportional representation on the Board of Directors of Maruti also. But Maruti had no share holding in Suzuki nor any representation on the Board of Directors of Suzuki. To rule out valuation under Section 14(1)(a), the seller and the buyer should have interest in the business of each other . One-sided interet is therefore, not enough; there has to be a mutuality of interest and Maruti is right in pleading that such mutuality of interest did not exist [1984 (17) E.L.T. 323 (S.C.) - Union of India Others v. Atic Industries Ltd.]. Confronted with this situation, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance in the argument of Maruti that payment of royalty/fee under the Licence Agreement was relatable directly to indigenous manufacture of components and vehicles to Suzuki s patents, designs and specifications. Similarly, use of the trade mark MARUTI-SUZUKI was also for marketing of the indigenously manufactured goods in India. Neither the royalty nor the trade mark MARUTI-SUZUKI had anything to do with import of components, assemblies and vehicles from Japan. One can understand the logic behind payment of royalty. When Suzuki transferred the technical know how and permitted Maruti to use its patents and designs, Suzuki had naturally expected to be compensated for it. When the indigenisation programme of Maruti progressed, import of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch the goods were ordinarily sold or offered for sale . The respondents contended that the same models of Suzuki cars were marketed in Japan also, though not in very large numbers. The learned representative of the department stated that even so it was a fact that there was no multiplicity of international buyers for the goods. We put the following Supreme Court judgments to the learned representative of the department in which the brand name owner was the sole buyer of the goods and yet the manufacturer s price to the brand name owner was accepted as the basis for assessment so long as the price was a fully commercial one and the dealings were at arm s length : 1. 1985 (22) E.L.T. 302 (S.C.) - Cibatul Ltd. 2. 1985 (22) E.L.T. 324 (S.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a fully commercial price. Clause 4.03 of the Supply and Purchase Agreement between the two parties states that : Prices of PARTS shall be the export prices thereof established by SUZUKI, which are subject to such changes or variations as may be made by SUZUKI from time to time by SUZUKI s written notice to MARUTI . The learned representative of the department stated that export prices were settled after negotiations between the two parties. Even so, it does not mean that negotiated prices cease to be commercial prices. Negotiations have been a part of commercial contracting since time immemorial. Since it has not been shown by the department that Maruti was given some extra - commercial treatment, the price charged has to be tre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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