2008 (6) TMI 51 - AT - Customs

Appellants were appointed as the representative of foreign company under Distributorship Agreement price paid by appellant is discounted - It is not clear as to why a commission relatable to imports by third parties from the foreign supplier is sought to be added to the value of the goods imported by the appellants from the same supplier matter remanded in respect of technical know-how fee and royalty, they were not to be added to the T.V. of the goods imported by appellants

Summary

Issues:
Enhancement of assessable value of imported goods, applicability of Customs Valuation Rules, Representation Agreement, Distributorship Agreement, inclusion of technical know-how fee and royalty in assessable value.

Analysis:

1. The appeal was against the enhancement of the assessable value of imported goods, including machines and spare parts, from a German Company. The relationship between the appellants and the supplier, as per Customs Valuation Rules, was through a Representation Agreement where the appellants were entitled to a commission. Another Distributorship Agreement appointed the appellants as distributors in India. The Joint Commissioner ordered provisional assessment by loading commissions on the FOB value of goods sold to third parties, leading to a substantial increase in assessable value. The appellate authority modified the loading percentages but upheld the decision. The appellants contended that they purchased goods at international list prices, contradicting their earlier claims of discounted prices.

2. The discrepancy in the appellants' stand regarding purchase prices and discounts led to confusion. No transactions occurred under the Distributorship Agreement, yet loading of values was ordered. The purpose of commissions under different agreements and their relevance to imported goods was questioned. The case required a remand to the original authority for clarification on the discounts claimed on spare parts.

3. The issue of including technical know-how fee and royalty in the assessable value was settled. The Technical Collaboration Agreement required payment for technical know-how for manufacturing machinery in India. The lower authorities added the fee to the transaction value of imported components. However, the fee was deemed unrelated to the imported components, following precedents where technical fees were not added to transaction values. The decision allowed the appeal on this specific issue and remanded the case for other matters to be reconsidered by the original authority.

4. The judgment concluded by allowing the appeal regarding the technical know-how fee and royalty, directing a remand for other issues to be decided by the original authority in accordance with the law. The appellants were granted a reasonable opportunity to present their case.