2004 (6) TMI 104 - AT - Customs

Summary

Issues:
1. Whether the technical know-how fee paid for transfer of technology should be added to the value of imported components.
2. Whether loading the transaction value of medical equipments by 20% based on a third party import is justified.

Analysis:

Issue 1:
The appellant, a joint venture of Wipro and GE, USA, imported components for manufacturing medical equipment, including Ultra Sound Scanners and CT Scanners. An agreement was made with YMS for technology transfer, with the appellant paying a technical know-how fee. The Deputy Commissioner proposed to include this fee in the assessable value of the imported goods. The appellant argued that the fee was for manufacturing processes, not parts/components. The Tribunal found that the agreement did not relate to the manufacture of parts/components, and the fee was not a condition of sale of imported goods. Relying on precedents, the Tribunal held that the authorities erred in adding the know-how fee to the imported parts' value.

Issue 2:
The show cause notice did not propose enhancing the transaction value based on a third party import. The Deputy Commissioner relied on a third party's import to load 20% to the declared value by the appellant. The appellant argued that the two transactions were not comparable due to various reasons, such as different terms of delivery and duty rates. The Tribunal agreed, stating that the notice lacked any proposal for such enhancement. Therefore, the loading of the transaction value based on a third party import was deemed unjustified. The Tribunal set aside the impugned order and allowed the appeal.