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Issues Involved:
1. Whether the royalty and technical know-how fees paid by the appellant are to be included in the assessable value of the imported goods u/r 9(1)(c) and 9(1)(e) of Customs Valuation Rules, 1988. Summary: Issue 1: Inclusion of Royalty and Technical Know-How Fees in Assessable Value u/r 9(1)(c) The Customs authorities contended that the royalty and technical know-how fees payable by the appellant to M/s. T&N International should be added to the sale price of the imported goods. This addition was justified u/r 9(1)(c) of the Customs Valuation Rules, 1988, which includes royalties and license fees related to the imported goods as a condition of sale. The lower authority held that the payments towards technical know-how fees and royalties were conditions of sale for the import of the goods, as per Article No. 4.1 of the Technical Assistance and Trade Mark Agreement. The appellant argued that these payments were related to goods manufactured in India and not to the imported goods, distinguishing their case from the Essar Gujarat case. Issue 2: Applicability of Rule 9(1)(e) The Customs authorities also invoked Rule 9(1)(e), which includes all other payments made as a condition of sale of the imported goods. The lower authority and the Dy. Commissioner found that the payments for technical know-how and royalties were conditions of sale for the imported goods, as without these payments, the goods could not be manufactured or marketed in India. The appellant contended that the royalties and license fees were not related to the imported goods but to the products manufactured in India. Findings and Conclusion: The Tribunal examined the agreement between the parties and found that the royalty and license fees were not related to the supply of materials or capital goods but were for the use of technical know-how and the foreign shareholder's brand name on products manufactured in India. The Tribunal noted that the invoices for the imported goods represented their full value, and there was no justification to add the royalty and license fees to the declared value. The Tribunal concluded that the addition ordered by the lower authorities was contrary to Rule 9(1)(c) and Rule 9(1)(e) and the legal position stated in previous Tribunal decisions. The judgment of the Apex Court in Essar Gujarat Ltd. was found inapplicable to the present case. Decision: The Tribunal held that there was no requirement to make any addition to the declared values for customs assessment of the goods. The impugned order was set aside, and the appeal was allowed with consequential relief to the appellants.
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