2017 (2) TMI 752 - AT - Customs

Valuation - technical know-how fees - royalty - whether the assessment of Perfume and Deodorants imported by the appellant is to be loaded by 20% of the value as technical know-how fees paid and 1% of the value to be loaded on the royalty paid by the appellant to their parent company Unilever PLC or otherwise? - Held that - the amount paid for technical know-how fee and the royalty charges are not to be included in the assessable value of the imported goods, if such payment is for the goods to be manufactured out of the technical know-how, which is transferred by an agreement - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Assessment of Perfume and Deodorants imported by the appellant - Loading of technical know-how fees and royalty on the value of imported goods.

Analysis:
The appeal challenged the Order-in-Appeal passed by the Commissioner of Customs (Appeals) regarding the assessment of Perfume and Deodorants imported by the appellant. The main issue was whether the assessment should include loading of 20% of the value as technical know-how fees paid and 1% of the value as royalty paid to the parent company. The appellant argued that the imported goods were for trading purposes and not related to the technical know-how fees and royalty paid for manufacturing items of the parent company. The appellant contended that the addition of these charges to the assessable value of the imported goods was incorrect. The Revenue, on the other hand, argued that the appellant and the supplier were part of the same group, making them interconnected undertakings, and therefore, the loading of value was justified.

Upon reviewing the submissions and records, the Tribunal found the first appellate authority's order unsustainable for multiple reasons. Firstly, it was established that the imported consignment of perfume and deodorants was for trading purposes, unrelated to the technical know-how fees and royalty paid for other products. The Tribunal agreed with the adjudicating authority's findings that the prices charged to unrelated buyers were comparable to the imported consignment, indicating no influence from the technical know-how agreement. Secondly, referencing a previous case, the Tribunal held that payments for technical know-how fees and royalty charges should not be included in the assessable value of imported goods if they are for goods manufactured from the transferred technical know-how. This principle was deemed applicable to the current case.

Considering the facts and circumstances, the Tribunal concluded that the impugned order was unsustainable and set it aside, allowing the appeals in favor of the appellant. The decision highlighted the importance of assessing the purpose of imported goods separately from any technical know-how fees or royalty payments related to other products, ensuring a fair and accurate valuation process.