TMI Blog2009 (1) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. The appellant manufacture the products out of raw material/semi-finished articles or components imported from the collaborators and sell the same under the name Crompton Greaves Ltd. in the domestic market. They were paying duty on the imported items at the value at which they have procured the same from the collaborator and this value after due scrutiny was accepted by the Dy. Commissioner (Valuation Cell) vide his order-in-original dated 29-6-2000. The Dy. Commissioner in his order inter alia observed that the value of the goods received from their supplier is based on quotation and purchase order. They have imported the components and other parts from their collaborator and other associates and have furnished a certificate t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adjudicating authority while accepting the transaction value under Rule 4(3), has ignored the fact that it is mandatory to make adjustments in terms of Rule 9 of the Customs Valuation Rules, 1988. The technical know-how is related to imported goods because imported goods are of no value to the importer unless they are processed in accordance with the manufacturing process contained in the technical information supplied by the collaborator. Obtaining a licence from BTR was a pre-condition of sale and in consideration of the know-how and for use of trade marks, Joint Venture Company shall pay to BTR a technical assistance fee. As per Rule 9(1) of Customs Valuation Rules, 1988 royalty is to be added in the invoice value, if it is related ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponents and parts shall be procured from the collaborators only and from no other source. It was submitted that there is no such condition in their agreement and for this purpose attention was invited to the technical agreement wherein clause 2.2(c) it has been stated that the technical information shall include information as to the kind, type and best source of supplies for purchase of purchase of such raw materials and chemicals are needed for the manufacture of the products. In the entire agreement, there is no clause which binds them to procure the material and component parts from the collaborators only and therefore the know-how and royalty agreement cannot be said to have an inbuilt condition that the components and raw materials h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only. On the other hand, from the technology agreement we find that the collaborators have only agreed to provide information in respect of the best source from which the raw materials components can be procured and have not imposed any condition that the same have to be procured from them only. In view of the same, the procurement of raw materials cannot be considered as a condition of sale for the purpose of providing royalty and technical know-how and therefore following the decision cited by the appellants in their support we hold that the royalty and lump sum fee cannot be added in the assessable value and accordingly set aside the order of the Commissioner (A) and allow the appeal with consequential relief. - - TaxTMI - TMITax - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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