2011 (1) TMI 1019 - AT - Customs

Stay application - Valuation - whether the royalty paid was liable to be included in the assessable value of the imported goods under Rule 10(1)(c) of the Customs Valuation Rules - Chartered Accountant s certificate dated 25.11.2010 showing particulars of the royalty paid on sale proceeds of goods manufactured and sold locally is available on record. The Chartered Account has certified the royalty and payment for technical know-how fees payable to Seco Tools AB, Sweden, accounted for by the appellant-company in its books of accounts - Held that - Having found that a document with the semblance of the break-up offered by the appellant before the lower appellate authority is now available on record, the matter has to be sent back to the said authority for fresh decision. It is open to the Commissioner (Appeals) to call upon the assessee to prove the veracity of the Chartered Accountant s certificate by producing their audited accounts and relevant records, appeal is allowed by way of remand.

Summary

Issues:
1. Stay application seeking stay of operation of the impugned order.
2. Determination of whether royalty paid by the appellant was liable to be included in the assessable value of imported goods under Rule 10(1)(c) of the Customs Valuation Rules.
3. Consideration of Chartered Accountant's certificate as evidence of royalty paid only on the sale proceeds of manufactured goods.
4. Decision to remand the matter back to the lower appellate authority for fresh decision.

Analysis:
1. The appellant filed a stay application seeking to stay the operation of the impugned order passed by the Deputy Commissioner of Customs. The impugned order was set aside in favor of the Revenue. The order was passed in pursuance of a remand order of the Bench. The appellate authority noted that the appellant had paid royalty to their foreign collaborator on total net sales in India. The appellant failed to provide a break-up of the net sales in different categories. The appellate authority proceeded to determine the inclusion of royalty in the assessable value of imported goods under Rule 10(1)(c) of the Customs Valuation Rules, ultimately ruling against the appellant.

2. A Chartered Accountant's certificate dated 25.11.2010 was presented, showing particulars of the royalty paid on sale proceeds of goods manufactured and sold locally. The certificate certified the royalty and payment for technical know-how fees accounted for by the appellant in its books of accounts for several financial years. The appellant claimed this certificate as conclusive evidence of paying royalty only on the sale proceeds of manufactured goods during the disputed period. The matter was deemed to be sent back to the lower appellate authority for a fresh decision. The authority was granted the power to call for further evidence and to verify the veracity of the Chartered Accountant's certificate.

3. The Tribunal found that the availability of the document resembling the break-up offered by the appellant necessitated a fresh decision by the lower appellate authority. The authority was directed to call upon the assessee to prove the authenticity of the Chartered Accountant's certificate by producing audited accounts and relevant records. Once established, the Commissioner (Appeals) was to make a decision in accordance with the law after providing the appellant with a reasonable opportunity to be heard personally. The decision to remand the matter back to the lower appellate authority was made, setting aside the impugned order and allowing the appeal.

This comprehensive analysis highlights the key issues addressed in the legal judgment, including the stay application, determination of royalty inclusion, consideration of evidence, and the decision to remand the matter for further proceedings.