2006 (1) TMI 358 - AT - Customs

Summary

Issues:
1. Inclusion of royalty in the assessable value of imported goods.
2. Valuation of the imported goods.
3. Leviability of penalty under Section 114A of the Customs Act, 1962.
4. Imposition of redemption fine.

Inclusion of Royalty in Assessable Value:
The appeal challenged the inclusion of royalty paid for the license to manufacture printers in India in the assessable value of imported shuttle assemblies. The Tribunal found a clear nexus between the payment of royalty and the import of shuttle assemblies, as the agreement mandated the use of these assemblies in the printers. The payment of royalty was deemed a condition of sale of the imported goods, justifying its inclusion in the assessable value. This decision aligned with Rule 9(1)(c) of the Customs Valuation Rules, 1998 and was supported by the precedent set in CC (P) v. Essar Gujarat Ltd.

Valuation of Imported Goods:
Regarding the valuation of the shuttle assemblies at US$ 612 per unit, the adjudicating authority relied on the agreement between the appellant and the supplier. Despite claims of negotiation for lower prices, the appellants failed to provide evidence to support this assertion. Consequently, the decision to adopt the value as per the agreement for demanding differential duty was upheld. The adjudicating authority's finding that the goods were liable to confiscation under Section 111(m) was deemed correct due to the lack of evidence to the contrary.

Leviability of Penalty under Section 114A:
The Tribunal noted that the appellants had paid the entire duty demand before the issuance of the show cause notice. Citing established case laws, it was determined that since the duty had been paid in full before the notice, the penalty under Section 114A of the Customs Act was not applicable. As a result, the penalty under Section 114A was set aside.

Imposition of Redemption Fine:
In upholding the confiscability of the imported goods under Section 111(m) of the Customs Act, the imposition of a fine of Rs. 66 lakhs under Section 125 was deemed appropriate. The quantum of the fine, amounting to roughly 10%, was considered reasonable and not excessive. The decision to uphold the redemption fine was based on the findings related to the confiscation of the goods under Section 111(m).

In conclusion, the Tribunal ruled that the royalty should be included in the assessable value of the imported goods and upheld the valuation adopted by the adjudicating authority. However, the penalty under Section 114A was set aside while the redemption fine was upheld. The appeal was disposed of accordingly on 24 Jan. 2006.