2012 (5) TMI 532 - AT - Central Excise

Valuation charge - Held that - The Commissioner (Appeals) has made a reference of the agreement which clearly explicit that the appellants are at liberty to procure components, parts and accessories from abroad or within India subject to certain specification and approval from their foreign collaborators - As per the impugned order and the agreement there is no restrictions for procuring components, parts/accessories on the appellant. Therefore, the only condition is for the standard and specification of the said components and parts. This condition does not effect the value of the imported goods - price of the imported goods are not affected by the related person. Therefore, we do not find any infirmity with the impugned order and we do not find any reason to interfere with the same - Decided against Revenue.

Summary

Issues:
Appeal against dropping of charge of valuation confirmed by first appellate authority.

Analysis:
The case involves an appeal filed by the Revenue against the dropping of a charge of valuation confirmed by the first appellate authority. The appellant, a Joint Venture Company between a foreign collaborator and an Indian company, entered into an agreement with the foreign collaborator for assembling, manufacturing, fabricating, marketing, and undertaking turn-key contracts for erection and commissioning. The appellant paid a lump sum technical know-how fee but did not pay the full agreed amount. The issue revolved around the relationship between the appellant and the foreign collaborator affecting the assessable value of imported components. The Commissioner (Appeals) noted that there was no condition binding the appellant to purchase components only from the foreign collaborator. The royalty was related to goods manufactured in India and had no connection with the cost of imported components. The department's reliance on previous judgments was deemed inapplicable as there was no condition of sale as interpreted by the Supreme Court. The Tribunal found no infirmity with the impugned order, upholding it and dismissing the appeal filed by the Revenue.

The Revenue contended that the appellant was not restricted in procuring components from abroad or within India as per the agreement. The Tribunal examined the impugned order and clause 6.5 of the agreement, concluding that there were no restrictions on the appellant for procuring components, parts, or accessories. The only condition imposed was related to the standard and specification of the components and parts, which did not impact the value of the imported goods. Both lower authorities had already addressed this issue, and the Tribunal concurred with the findings of the Commissioner (Appeals). Consequently, the Tribunal upheld the impugned order, stating that the price of the imported goods was not affected by the relationship between the parties. Therefore, the appeal filed by the Revenue was dismissed, and the impugned order was upheld.