2005 (10) TMI 185 - AT - Customs

Summary

Issues:
1. Inclusion of technical know-how fee in the assessable value of imported goods.
2. Inclusion of royalty in the assessable value of imported goods.

Analysis:
1. The issue regarding the inclusion of the technical know-how fee in the assessable value of imported goods was examined. The Commissioner (Appeals) acknowledged the special relationship between the appellants and the foreign collaborator but questioned if this relationship influenced the transaction value. The Commissioner's interpretation of a "condition of sale" was challenged, citing judicial decisions to support the argument that the technical know-how fee should only be added if there is a strict condition of sale. The Tribunal disagreed with the Commissioner's interpretation, stating that the term "condition of sale" has a wider connotation. Referring to legal precedents, the Tribunal concluded that there was no condition of sale in this case, hence the technical know-how fee should not be included in the assessable value of the imported goods.

2. The issue of including royalty in the assessable value of imported goods was also addressed. The Tribunal noted that the royalty can only be added if it has a direct nexus with the cost of the imported goods. In this case, the royalty was being paid for goods manufactured in India, and the department failed to provide evidence to refute this fact. Citing judgments cited by the respondents, the Tribunal found that the royalty had no nexus with the cost of the imported goods. Consequently, the Tribunal upheld the Commissioner (Appeals)'s finding that the royalty should not be included in the assessable value of the imported goods.

3. The Assent Order by another Member (T) concurred with the decision to dismiss the department's appeal. It was emphasized that the purchase of the impugned material from the foreign supplier was a condition for granting a license to manufacture in India, not vice versa. The argument that the payment of the technical know-how fee and royalty was a condition of sale of the imported goods was deemed incorrect. Therefore, there was no merit in the department's appeal, and the decision to dismiss it was affirmed.

In conclusion, the Tribunal upheld the Commissioner (Appeals)'s decision and dismissed the appeal regarding the inclusion of the technical know-how fee and royalty in the assessable value of the imported goods.