2002 (12) TMI 353 - Commissioner - Customs

Summary

Issues:
1. Whether royalty/licence fees payable by the importer to the supplier are addable to the value of imported components under Rule 9(1)(c) of the Customs Valuation Rules, 1988.

The appeal filed by the department against the Order-in-Original focused on the relationship between the supplier and importer as per Rule 2(2)(v) of the Customs Valuation Rules, 1988. The Dy. Commissioner stated that M/s. Visteon Automotive System India Private Ltd. and M/s. Visteon Corporation, U.S.A., are related entities. The order emphasized accepting the transaction value declared in the import invoice under Rule 4 of the Customs Valuation Rules, 1988, while reserving the right to address any suppression or mis-declaration affecting the invoice value separately under the law. The grounds of appeal highlighted the Technical Collaboration Agreement entered into by the importer with M/s. Ford Motor Co., USA, and the subsequent transfer of assets to Visteon Global Technologies Inc. (VGTI) and Visteon Corporation. The issue arose regarding the non-inclusion of royalty in the transaction value as per Rule 9(1)(c) of the Customs Valuation Rules, 1988, leading to a dispute over the loadability of royalty on the assessable value.

During the personal hearing, the respondent argued that royalty should not be added to the value of imported components as it pertains to the manufacture of licensed goods in India. The Commissioner analyzed the submissions from both parties and the case facts. The central issue revolved around whether the Royalty/Licence fees payable by the importer to Visteon Globe Technology Inc. (VGTI) should be included in the value of the imported components under Rule 9(1)(c) of the Customs Valuation Rules, 1988. The examination of the Technical Licence agreement revealed that the calculation of royalty excluded the landed cost of imported components. The Commissioner emphasized that Rule 9(1)(c) requires the royalty to be related to the imported goods directly or indirectly, which was not the case here as the royalty payment was calculated after excluding the price of the imported components used in manufacturing the licensed goods. Therefore, the Commissioner rejected the appeal, concluding that there was no direct or indirect relationship between the royalty payment and the imported goods.

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