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2004 (5) TMI 113 - AT - CustomsValuation (Customs) - Whether licence fee and service fee payable by the appellant are liable to be added to the value of imported components/parts under Rule 9(1)(c) of the Customs (Valuation) Rules, 1988 - HELD THAT - We find no merit in the view taken by the Commissioner. On going through the provisions of the agreement it would be very clear that technical know-how fee relates to the manufacture of WTG in India. Service fee is also in respect of service of manufactured product, namely, WTG. Apart from the fact that the agreement for supply of parts/components was entered into much earlier to the technical licence fee agreement, we find that the technical licence fee was payable in relation to WTG manufactured in India by the appellant and not in respect of parts/components imported by the appellant. Licence fee is not payable as a condition of sale of the imported goods. Therefore, according to us, both the licence fee would not satisfy the required conditions under Rule 9(1)(c) of the Customs (Valuation) Rules, 1988 for being added while assessing the value of the imported goods. We had occasion to consider a similar issue in M/s. Mando Brake Systems India Ltd. v. CC, 2003 (9) TMI 222 - CESTAT, NEW DELHI where we have upheld a similar contention raised by the assessee. Thus, we set aside the order impugned and allow the appeal.
Issues: Whether licence fee and service fee payable by the appellant are liable to be added to the value of imported components/parts under Rule 9(1)(c) of the Customs (Valuation) Rules, 1988.
Summary: The appeal involved a challenge against an order passed by the Commissioner (Appeals) regarding the addition of licence fee and service fee to the value of imported components/parts under Rule 9(1)(c) of the Customs (Valuation) Rules, 1988. The Deputy Commissioner initially held in favor of adding these fees, which was later reversed by the Commissioner (Appeals). The Tribunal remanded the matter for reconsideration, leading to the Commissioner (Appeals) deciding to add the fees back to the value of imports. The appellant argued that the licence fee and service fee should not be added under Rule 9(1)(c) as they were not directly related to the imported goods. The appellant emphasized that the licence fee was for R & D costs incurred by the foreign collaborator and the service fee was for technical assistance in servicing the WTG, not for the imported parts/components. The appellant cited relevant legal decisions to support their position. The Departmental Representative contended that the fees should be added as per the Commissioner (Appeals) decision. The Commissioner reasoned that the fees should be added as they were related to the assistance provided by the foreign supplier and the service of the manufactured product. The Commissioner noted the absence of evidence supporting the appellant's claim that parts could be procured from other sources. The Tribunal disagreed with the Commissioner's view, stating that the technical know-how fee and service fee were related to the manufacture and service of the WTG in India, not the imported parts/components. The Tribunal found that the fees did not meet the conditions under Rule 9(1)(c) for addition to the value of imported goods. The Tribunal cited a previous case where a similar contention was upheld. Therefore, the Tribunal set aside the previous order and allowed the appeal.
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