1996 (5) TMI 188 - AT - Customs

Summary

Issues:
1. Assessment of assessable value of Isostatic Press imported by the appellant.
2. Technical objection raised by the Senior Departmental Representative regarding the filing of the appeal.
3. Loading of gross invoice value with lump-sum fee and technical know-how fee paid to collaborators.
4. Determination of related person status between the appellant and the foreign supplier.
5. Justification of loading the price of the Press with part of the lump-sum payment and technical know-how fee.
6. Compliance with Customs Valuation Rules and previous judgments.

Analysis:

1. The main issue in this case is the assessment of the assessable value of the Isostatic Press imported by the appellant, concerning the inclusion of the technical know-how fee paid to their collaborators. The Tribunal analyzed the facts of the case, the collaboration agreement, and the contract with the foreign supplier to determine whether the fee should be added to the value of the Press.

2. A technical objection was raised regarding the filing of the appeal, questioning the authority of the Collector who passed the impugned Order. The Tribunal examined the communication process and ruled that the appeal was rightly filed to the Tribunal, overruling the objection raised by the Senior Departmental Representative.

3. The Tribunal delved into the issue of loading the gross invoice value with a portion of the lump-sum fee and technical know-how fee paid to the collaborators. The impugned Order had adjusted the price of the Press by 4.81% based on these fees. The appellant argued against this adjustment, emphasizing the lack of justification for including these fees in the value of the imported Press.

4. The related person status between the appellant and the foreign supplier was a crucial aspect of the case. The Department contended that the technical know-how fee paid to the collaborator should be part of the assessable value due to the collaboration's involvement in checking the design and quality of the Press. However, the Tribunal disagreed, citing the Customs Valuation Rules and finding no evidence to establish a related person relationship.

5. The Tribunal examined previous judgments, including those approved by the Supreme Court, to determine the legality of including lump-sum royalty or technical know-how fees in the price of imported goods. It was established that such fees paid to foreign collaborators should not be part of the goods' price, especially when the collaborators are not the manufacturers or suppliers of the goods in question.

6. Ultimately, the Tribunal allowed the appeal, setting aside the loading of the price with the lump-sum fee and technical know-how fee. The decision was based on the lack of justification for including these fees, the absence of a related person relationship, and the compliance with Customs Valuation Rules and established legal precedents.