TMI Blog2002 (2) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... in Rule 9(1)(c) of Customs Valuation Rules, 1988. During the hearing of the case, learned SDR pointed out that the addition would be justifiable in terms of Rule 9(1)(e) also as indirect considerations also have to be taken into account while assessing goods to duty. 3. The legal provision being pressed into service by the Customs authorities reads as under :- "9(1)(c) royalties and licence fees related to the imported goods that the buyer is required to pay, directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable. 9(1)(e) all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable". Interpretative Notes to Rule 9(1)(c) "Rule 9(1)(c) 1. The royalties and licence fees referred to in rule 9(1)(c) may include among other things, payments in respect to patents, trademarks and copyrights. However, the charges for the right to reproduce the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign collaborator. For achieving their business objective, therefore, the Indian company have not only to pay the price of the goods imported but also the fees for obtaining production licence rights, the technical know how, and royalty for manufacturing and marketing 'Ferodo Brand' Brake lining and Brake pads in India. Thus, these payments get related to the import and become condition of sale for the said import. Provisions of rule 9 of Customs Valuation Rules, 1988 therefore, get attracted in such a situation. The lower authority has also relied upon the judgment of Essar Gujarat Ltd. 1996 (88) E.L.T. 609 (S.C.) and Himson Textile Engineering Industries Ltd. 1997 (71) ECR 8 (T). After considering rival submissions, I am of the view that the payment for royalty and technical know how fees were condition of sale of the raw materials as clearly mentioned in the Art. No. 4.1 of the contract, wherein it is clearly mentioned that except with the prior written consent of the licensor, the licensee shall not be permitted to use the technical information to manufacture the licensed products using raw materials supplied from sources other than those nominated by the licensor in writi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the goods imported but also the fees for obtaining production licence rights, the technical know how, and royalty for manufacturing and marketing 'Ferodo Brand' Brake lining and Brake pads in India. Thus these payments get related to the import and become condition of sale for the said import. Provisions of Rule 9 of Customs Valuation Rules, 1988 get, therefore, attracted in such a situation in the light of the ratio of Hon'ble Supreme Court judgment in the case of Essar Gujarat Ltd. [1996 (88) E.L.T. 619 (S.C.)] and the ratio of decision of the Hon'ble CEGAT in Commissioner v. Himson Textile Engg. Industries Ltd. [1997 (71) ECR 8 (T)]. In terms of Rule 4 read with Rule 9, these elements of payment become includible in the value for assessment of duty purpose". 6. The appellant's contention is that the above findings of the lower authorities are contrary to the specific provisions of the Rule 9(1)(c) which have been relied upon while passing the orders. They contend that the royalties and licence fees are includible in the assessment of goods only if those payments "related to the imported goods". They submit that it is the admitted position in the present case that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sor's standard conditions of sale, save that in the event of any conflict or discrepancy between the said conditions and the terms of this agreement, the terms of this agreement shall prevail. The licensee shall pay to the licensor the whole of the licensor's costs in supplying items of machinery, equipment and tooling in accordance with this clause. For such purpose the licensor's invoice and copy of bill of lading shall be conclusive evidence of the costs and expenses incurred by the licensor and delivery of the items free on board to an Indian port. 4.3. At the request of the licensee, the licensor shall use its best endeavours to supply raw materials to the licensee for use in the manufacture of the licensed products. Where raw materials are supplied to the licensee, the licensee shall pay to the licensor all costs and expenses incurred in relation to such supply no later than sixty (60) days, or as otherwise agreed, after the presentation of the licensor's invoice in that behalf and such invoice shall be conclusive evidence of the costs and expenses incurred by the licensor. Prices of the raw materials will be those ruling at the date of dispatch and shall be in accord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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