TMI Blog2016 (9) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... ice paid by the applicant to the overseas third party manufacturers will be based on the purchase invoices and is the sole consideration for the sale transaction – value of invoice raised will form the transaction value. Trade Mark/ License Fee - payment made in terms of the foreign collaboration agreement - payment under Rule 10 (1)( c)of the Rules – is the above amount required to be added to the Transaction Value of the said goods for levy of Customs Duty under the Act read with the Rules – Held that: - the applicant will pay the Trademark License fee in lieu of grant of right to exploit and use of associated trademark for sale of said goods; that such Trademark License fee will be payable on the basis of the sales made by the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t : Shri Tarun Gulati, Advocate For the Department : Shri Amresh Jain, Authorised Representative (AR) RULING M/s H M Hennes Mauritz Retail Pvt. Ltd (hereinafter also referred to as applicant) is an Indian wholly owned subsidiary comprising of M/s H M Hennes Mauritz GBC AB, Sweden ( H M GBC ) holding 99% of equity shares of the applicant and M/s H M Hennes Mauritz International AB, Sweden ( H M AB ) holding the remaining 1% shares of the applicant. Applicant is in the process of setting up its business of single brand retail trading of various products viz. Clothes and Apparel, Footwear, Cosmetics and Accessories, Handbags, Home furnishing products, Children Products, Outdoor utility products etc. under the brand H M . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase orders will be placed on the third party manufacturers. Further, the invoice raised by the third party manufacturers on the applicant will form the basis of the value of the said goods for the purpose of Customs Valuation. 3. Pursuance to import of the said goods, applicant proposes to market and sell the said goods in India on the basis of commercial arrangements with H M GBC. In this regard, for the sale of goods in India and using the H M concept and brand, the applicant has entered into three separate Agreements with H M GBC, which are explained hereunder:- a. Foreign Collaboration and Sub-License Agreement: Applicant has entered into a Foreign Collaboration and Sub-License Agreement with H M GBC dated 01.04.2014 for obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods, the overseas third party manufacturers will issue separate invoices directly to the applicant on the basis of which, the said goods will be cleared in India. The price shown on the invoices of the third party manufacturers will be the sole consideration paid for the said goods and apart from the payment in terms of the said invoices, no other payment will be made by the applicant or by anybody else on behalf of the applicant to the said third party manufacturers for the said goods. 5. Applicant has raised following questions for rulings by this Authority; A. Whether the value on the invoice raised by the overseas third party manufacturer on the applicant is the Transaction Value and on which Customs Duty is required to be paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xists in the present case. Revenue further state that applicant has submitted that, they are not making any of the payment specified under Rule 10 to the sellers i.e. the third party manufacturers either directly or indirectly in relation to the sale of the goods by the sellers to the applicant; that Rule 10 (i) ( c) of the Valuation Rules prescribe that royalties and license fee paid by the buyer of the goods, directly or indirectly, as a condition of sale, is includible in the Transaction Value; that therefore, for inclusion of royalties and license fee, it must clearly be established to be a condition of sale‟ of the goods; that in the present case, import of the said goods from overseas third party manufacturers and payments of T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment of Sales and Business Support fee is also not payable by the applicant as a condition of sale of said goods by overseas third party manufacturers to the applicant; that submissions made with regard to the payment of Royalties and License fees supra is also mutatis mutandis applicable to the payment of sale and business support fee. 9. Revenue submits that as a matter of abundant precaution, the possibility of any Agreement between the third party manufacturers and H M GBC needs to be enquired into whereby the third party manufacturers might have agreed to supply the goods to only such party who enters into an Agreement with the H M GBC under the Foreign Collaboration Agreement and the Trademark License Agreement. However, dur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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