1995 (10) TMI 140 - AT - Customs

Summary

Issues Involved:
The issues involved in the judgment include the determination of assessable value for components of motor cycles under the Customs Act, consideration of technical assistance agreements, application of Customs Valuation Rules, and the relevance of running royalty in pricing.

Assessable Value Determination:
The Assistant Collector determined the assessable value by adding one per cent to the invoice price, which was challenged in the appeal. The Customs Valuation Rules were amended in 1988, leading to a similar order by the Assistant Collector for the subsequent period. The appellate authority in the later case considered the relationship between the parties and concluded that the running royalty is not part of the price for components, contrary to the earlier appeal.

Technical Assistance Agreement:
The agreement between the assessee and M/s. Yamaha Motor Company Ltd. involved the supply of technical information, know-how, and industrial property rights for manufacturing motor cycles. The agreement specified payment terms, including a lump sum amount and running royalty per unit of motor cycle manufactured. Disputes arose regarding the interpretation of the agreement and the inclusion of running royalty in the assessable value of components.

Legal Precedents and Interpretation:
The judgment referred to previous cases such as Collector of Customs v. Maruti Udyog Limited and Union of India v. Mahendra & Mahendra Ltd., where the courts emphasized the separation of technical know-how agreements from the pricing of components. The Tribunal and Supreme Court decisions highlighted the need for a clear nexus between royalty payments and the actual supply of components.

Conclusion:
Based on the terms of the agreement and legal precedents, the appellate tribunal dismissed one appeal and allowed another, setting aside the order that added one per cent to the invoice price for determining the assessable value. The judgment affirmed that the invoice price should be considered as the assessable value under Section 14(1)(a) of the Customs Act, supporting the assessee's position regarding the pricing of components and the role of running royalty.