TMI Blog2019 (2) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the agreement, it can be concluded that by no stretch of imagination can it be concluded that the payment of US$2 million was a condition for the sale of the coating plant by the supplier to the Respondent. Since the one of the main conditions specified in Rule 9 (1) (c) of the Customs Valuation Rules, 1988 is not satisfied, there is no justification for addition of the said amount to the transaction value of the imported coating plant. In the case of Hindalco Industry Ltd. [2015 (5) TMI 696 - SUPREME COURT], the Hon’ble Supreme Court considered and decided a similar question with reference to the license fee paid for import of capital goods for setting up of a smelter plant. The Apex Court came to a similar conclusion that such lic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessable value of the imported goods, in terms of Rule 9 of the erstwhile Customs Valuation Rules, 1988 read with Section 14 (1) of the Customs Act, 1962. The Original Authority on adjudication, enhanced the assessable value of the imported coating plant to the extent of the amount paid as per TCC and accordingly, demanded the differential duty. Against this enhancement of value by the Original Authority, the respondent filed an appeal to the Commissioner (Appeals), and he remanded the issue for denovo decision to the Original Authority. In denovo proceedings, order was passed confirming the differential duty once again. In the second round of litigation before the Commissioner (Appeals), the impugned order was passed in which he se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) After elaborately taking us through the Technical Assistance Agreement as well as the Contract for procurement of the coating plant, he submitted that the two agreements are independent of each other and there is no suggestion in any of the clauses of either contract that the payment of US $ 2 million satisfied either of the two conditions specified in Rule 9, above. (iii) The amount of US $ 2 million has been paid by the M/s. Plansee for the purpose of transfer of Knowhow which means, designs, drawings, standards, specifications and all other technical data. Such knowhow after transfer is to be made use of by the respondent to manufacture goods in their manufacturing facility. It cannot be said that such amounts are paid as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Customs Valuation Rules. In terms of this Rule, Royalty and license fee payable by the buyer to the seller directly or indirectly are required to be added to transaction value subject to two conditions, (i) these are related to the imported goods and (ii) these are payable as a condition for sale of goods being valued. 9. The relevant Article 6 of the Technical Collaboration Agreement which deals with the purchase of manufacturing facility by the respondent from the foreign supplier is reproduced below for ready reference:- 6.1 In the event that any manufacturing facilities are to be supplied to LICENSEE by or through PLANSEE TIZIT, the same shall be determined by LICENSEE after consultation with PLANSEE TIZIT and will be subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no justification for addition of the said amount to the transaction value of the imported coating plant. 11. We have also carefully considered the various decisions cited on behalf of the Respondent. We find that in the Tribunal decision in the case of Hindustan Motors (supra), the Delhi Bench of the Tribunal had occasion to examine a similar question in relation to Rule 9 (1)(c), ibid. In that case the dispute was regarding the lump sum payment made to the supplier by way of technical knowhow fee. After carefully analyzing the agreement between the buyer and seller the Tribunal concluded that such technical knowhow fee paid for transfer of technical knowhow cannot be said to be a condition for purchase of the equipment from the foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration (Yen 451,220,000) would be in three instalments without any reference to the goods imported by the Appellants. Thus in the present matter also licence fee only relates to the manufacture of the licensed product and not to the import of goods from M/s. Mitsubishi. Accordingly, the conditions stipulated in Rule 9(1)(c) of the Customs Valuation Rules are not satisfied. A perusal of the Component Supply Agreement also does not reveal any clause to indicate that the Appellants are required to pay the license fee as a condition of the sale of the goods. The Revenue has also not controverted the submissions made by the Appellants that the imports were made by them at the agreed prices which were normal international prices of the goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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