Home Case Index All Cases Customs Customs + AT Customs - 2016 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (3) TMI 984 - AT - CustomsWhether the raw material imported by the appellant from their parent concern needs to be loaded with the value of royalty paid by them to parent concern - Import of raw materials from their collaborator - Held that - the agreement is titled as a technical know-how agreement. The entire agreement is in respect of the finished goods to be manufactured by the appellant in their factory from the technical know-how received from parent concern. The said agreement does not talk about or restrict the appellant to purchase or procure raw materials only from the parent concern. The findings of adjudicating authority are correct. The first appellate authority has not brought on record any evidence to indicate that there was restriction imposed on the appellant to procure the raw materials only from the parent concern. In the absence of any such evidence, we are of the considered view that the loading of the value of by the amount of royalty paid by appellant is not in consonance with the law settled by the higher judicial fora. - Decided in favour of appellant
Issues:
1. Consideration of royalty paid by the appellant for imported raw materials in the assessable value. 2. Interpretation of the technical know-how agreement between the appellant and their parent concern. 3. Application of Customs Valuation Rule, 1988 in determining the assessable value. Issue 1: Consideration of Royalty in Assessable Value The case involved the question of whether the royalty paid by the appellant to their parent concern for imported raw materials should be included in the assessable value. The Commissioner of Customs (Appeals) held that the transaction value accepted under Rule 8 of the Customs Valuation Rule, 1988 was incorrect as it did not include the royalty paid. The Commissioner argued that the technical know-how provided by the parent concern was essential for the manufacturing process, making the royalty payment relevant to the imported goods. Citing Supreme Court decisions, the Commissioner contended that royalty should be included in the value under Rule 9(1)(c) of the CVR, 1988. Issue 2: Interpretation of Technical Know-How Agreement The Tribunal examined the technical know-how agreement between the appellant and their parent concern. The agreement focused on the manufacturing of finished goods using technical knowledge provided by the parent concern. However, the agreement did not specify any restriction on the procurement of raw materials solely from the parent concern. The Tribunal found that the first appellate authority had not presented any evidence to support the claim that raw materials had to be sourced exclusively from the parent concern. Consequently, the Tribunal concluded that loading the value with the royalty paid by the appellant was not justified based on the agreement and lack of evidence of procurement restrictions. Issue 3: Application of Customs Valuation Rule, 1988 The Tribunal reviewed the application of the Customs Valuation Rule, 1988 in determining the assessable value. It was noted that the adjudicating authority had accepted the transaction value under Rule 8 of the CVR, 1988, but the Commissioner contended that Rule 9 should have been applied to include the royalty payment. The Tribunal ultimately held that the impugned order was unsustainable as the loading of royalty in the value was not supported by the law and set aside the decision of the first appellate authority. The adjudication order was upheld as the correct view, and the appeal was allowed. In conclusion, the Tribunal ruled in favor of the appellant, setting aside the decision that included royalty in the assessable value of imported raw materials. The judgment emphasized the importance of interpreting agreements accurately and applying the relevant customs valuation rules in determining the assessable value of imported goods.
|