9911796707
TMI Blog2023 (11) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... epted the invoice price as the transaction value under Rule 3(3)(a) of the Customs Valuation Rules, 2007. The Commissioner (Appeals) in the impugned order held that the appellant had accepted the addition of 5% royalty on carbon brushes under Rule 10(1)(c) of the Customs Valuation Rules, 2007, therefore, the issue is related to only addition of royalty on all other imports other than carbon brushes. It is observed by the Commissioner (A) that the appellant had not provided any proof to show that the items imported were also from unrelated suppliers and since the imports were only from the related suppliers, it is assumed that it is a condition for sale for buying only from the related suppliers. Accordingly, as per Rule 10(1)(c), royalty be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Commissioner of Customs vs. Ferodo India Private Limited: 2008 (224) ELT (23) (SC). With regard to carbon strips, the learned counsel submitted that they had not admitted their liability as claimed by the Commissioner (A) in the impugned order instead their claim was that the payment of 5% royalty is not a prerequisite condition to import carbon strips and other goods from the associated companies to use in the manufacture of pantographs. The royalty for technical know-how for the manufacture of pantographs is a post import activity and therefore, it cannot be the part of the transaction value for the imported goods. In this regard, reliance is placed on decision of the Hon'ble Supreme Court in the case of Commissioner of Customs Port, Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the agreement is on the basis of transfer prices. As per the transfer pricing study analysis, it was concluded that the international transaction undertaken by M/s. Schunk India and its associated enterprises was at arm's length. Based on the cost analysis and based on the declaration given by the supplier, the original authority concluded that "I find that the importer has made an attempt to justify the reasonableness that the relationship is not influenced the price as required under rule 3(3)(a) of the Customs Valuation Rules 2007 and therefore the declared price was accepted as transaction value for all the imports made by the appellant". In addition, it is also seen that the original authority at para 19(i) of the Order-in-Origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplier, the question of adding royalty of 5% does not arise. The Commissioner (A) in the impugned order has held that the appellants have not shown any imports from unrelated suppliers and therefore, it can be inferred that the import is made only from the related suppliers without substantiating the fact that when the transaction value was accepted as to how the royalty paid on the technical know-how influenced the price of the imported goods. 7. The appellant's submission that once the transaction value of the goods imported from the associated companies are at "arm's length price" under Rule 3(3)(a) of the Customs Valuation Rules, 2007 is accepted, the Department cannot load 5% royalty to the transaction value under Rule 10(1)(c) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods. He also incurs the cost of technical know-how. Therefore, the Department in every case is not only required to look at TAA, it is also required to look at the pricing arrangement/agreement between the buyer and his foreign collaborator. For example if on examination of the pricing arrangement in juxtaposition with the TAA, the Department finds that the importer/buyer has misled the Department by adjusting the price of the imported item in guise of increased royalty/licence fees then the adjudicating authority would be right in including the cost of royalty/licence fees payment in the price of the imported goods. In such cases the principle of attribution of royalty/licence fees to the price of imported goods would apply. This is beca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion agreements and the attendant circumstances, we are of the view that the concurrent judgments of the High Court at Bombay do not merit interference in this appeal. The crucial aspects appearing in the case are that the parties were dealing at arm's length, that the seller and the buyer have no interest in the business of each other, that, ordinarily, the technical know-how of the machine can take in the assembly thereof, that the CKD packs and spares were supplied to the respondents by the collaborator not at a concessional price but at the price at which they were sold to others, that, as agreed to by the respondents, the option was entirely with the respondents to order the parts as per their requirements, that there was no obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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