TMI Blog2003 (6) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... rty rights and royalty of 2.5% on the net selling price of each licensed product manufactured and sold are required to be added to the invoice value of the capital goods, raw materials, etc., imported by the appellant under Rule 9(1)(c) of the Customs Valuation Rules, 1988. 2.The appellant-company was formed on a joint venture agreement dated 3-2-1996 between M/s. Panalfa Investments Pvt. Ltd., New Delhi, M/s. DCM Daewoo Motors Ltd. New Delhi and M/s. Dongwon Metals Industries Co. Ltd., Korea. Pursuant to the joint venture agreement the appellant was set up to manufacture, assemble and sell complete exhaust systems including catalytic converter. The parties have entered into an agreement of Cooperation and Technical Licence. Under the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms for re-adjudication on the ground of violation of principles of natural justice. 4.On re-adjudication the Deputy Commissioner of Customs held that the appellant-company and Dongwon Metal Industries Co. Ltd. are related in terms of Rule 2(2) of the Customs Valuation Rules. He held that the lump sum technical know-how fee of US$ 6,50,000 was not liable to be added to the value of the imported goods either under Rule 9(1)(b)(iv) or Rule 9(1)(c). He took the view that the lump sum payment was not related to the imported goods and that the payment of royalty was not a condition of sale of the goods. He ordered to accept the transaction value. The above order of the Deputy Commissioner was reviewed by the Commissioner of Customs (Import), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that due to financial difficulty the appellant has not yet paid royalty as per the agreement with the foreign collaborator which would clearly show that payment of royalty is not a condition for sale of the goods imported. 6.Learned Departmental Representative on the other hand pointed out that the agreement as a whole has to be considered and if the conditions of different articles are put together it can be seen that the royalty payable would cover the imported goods. 7.We find merit in the contention raised by the appellant. Preamble of the agreement of cooperation and technical licence states as follows : "Whereas, PDIPL desires to obtain and Dongwon is willing to grant to the right and licence to design, manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides as follows : "'During the terms of this agreement, Dongwon is responsible to furnish accurate and complete technical information and parts to PDIPL in that form and with that contents as they are being used by the Dongwon for the manufacture of the licensed products." According to the Departmental Representative, the above clause would show that Dongwon is responsible to make available parts to PDIPL. Learned Counsel for the appellant clarified that the word 'and' in between information and parts seems to be a mistake for the word 'on'. It will be clear by the subsequent clause (7) which would show that PDIPL is free to modify or substitute different parts but they should notify Dongwon. 8.On going through the entire agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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