TMI Blog2017 (4) TMI 423X X X X Extracts X X X X X X X X Extracts X X X X ..... ct - demand with interest sustained. Royalty is payable by M/s Bharat Apex Industries Ltd. on the ex-factory sales price of the product and the same is granted to the M/s Bharat Apex Industries Ltd. for an exclusive but non-transferable license and same is being paid by M/s Bharat Apex Industries Ltd. in connection with the marketing and sale of the product as per Para 10.2 of the agreement. There is no evidence that the burden of royalty is to be borne by the appellants. Same is therefore not includible in the assessable value of the goods. The facts of the Pepsi case are entirely different as there was integral link between the obligation of the bottlers to purchase the concentrate exclusively from the assessee and use of trademark of assessee subject to payment of royalty - demand set aside for royalty. The penalty is reduced to ₹ 1,80,000/- on the basis of pro-rata value of the technical know-how and drawing and designs. Appeal disposed off - decided partly in favor of assessee. - Appeal No. E/3218/2007 - Final Order No. 60331/2017 - Dated:- 17-1-2017 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Sh. Lalit Garg, Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the design and drawings were not includible in the assessable value in view of the Tribunal s decision in the case of Mysore Kirloskar Ltd. Vs. Commissioner of Central Excise, Belgaum 2002(141) E.L.T. 423 (Tri. Bang.). As for the royalty amount, he stated that royalty has been paid by the customers i.e. M/s Bharat Apex Industries to their foreign collaborators as share of profit in return for using their goodwill in marketing their products. This payment has no bearing on the product manufactured by them for M/s Bharat Apex. This cannot therefore be treated as extra consideration for the manufacture of final product sold to M/s Bharat Apex Industries. 5. The Ld. AR submitted that the cost of design and drawings form additional consideration in relation to the manufacture of the goods. He added that the issue was no longer res integra and had been settled by the Hon ble Supreme Court in the case of Commissioner Central Excise, Belgaum Vs. Mysore Kirloskar Ltd 2008 (226) ELT 161 (SC). As for the royalty, he relied upon the decisions of the Pepsi Food Ltd. Vs. Collector of C. Ex., Chandigarh 2003 (158)E.L.T. 552(S.C.) and M.G.M. Entertainments Pvt. Ltd. Vs. CCE, Chennai 2008 (228) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see desires to manufacture various products and components in India, but requires technical and other assistance in order to do so and WHEREAS, the Licensor has the right to all know-how, including drawings, specifications and technical knowledge, necessary to the manufacture, distribution and sale of such products and components. KNOW-HOW shall mean Licensor s knowledge and experience including but not limited to drawings, specifications, technical knowledge, manufacturing process, catalogs, designs and sales manuals, pricing procedures, price lists, sizing procedures and other information, which is now, or may become, during the term of this agreement available to or in possession of the licensor and which know-how is necessary or desirable to manufacture market and sell the product. 1.2 Licensor hereby undertakes and agrees to deliver to Licensee, technical documentation including drawings for the manufacture of the product (workshop and assembly drawings) and other know-how herein above to the extent that such delivery is reasonably possible. . 3.1 In consideration of the technical assistance and know-how for manufacture of the product, the License ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factured out of concentrate sold by the assessee. Realization of royalty was as important as the realization of the sale price of concentrate from the assessee s point of view. Bottlers were obliged to purchase the concentrate from assessee alone, use the trademark of assessee on bottled beverage in addition to trademark of Pepsico and comply with the instructions of assessee in regard to manufacture, sale and distribution of beverages. There thus existed an inextricable bond between the obligation of bottler to purchase concentrate exclusively from assessee and user of trademark of assessee subject to payment of royalty. On that basis royalty was adjudged to be included in the assessable value. He also relied upon the second case laws of Mutual Industries Ltd. Vs. collector of Central Excise, Mumbai 2000 (117) E.L.T. 578 (Tribunal) which actually pertains to inclusion of value of mould. There is no specific finding as to how these case laws are applicable to the facts of the present case. The Ld. Commissioner (Appeals) in his order has also not given any separate finding on the royalty part. After elaborately discussing technical know-how and design and drawing portion, he simply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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