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2015 (10) TMI 830 - AT - CustomsValuation of goods - Inclusion of royalty - Held that - Ground of appeal is very weak. It states that the importer had imported parts from their collaborator to manufacture goods of foreign collaborator s brand name. Interestingly, we find that in the present case there is no import of goods on the value of which the amount of royalty is sought to be added. There is no evidence of actual import in the appeal papers. In any case we note that in terms of Rule 10(1)(c) of the Customs Valuation Rules, royalty may be added to the price of the goods only if the same is a condition of the sale of the imported goods being valued. This is established law as held in various judgments of the Apex Court including the case of Commissioner of Customs Vs. Ferodo India Pvt. Ltd. 2008 (2) TMI 12 - Supreme Court . Revenue has not established that the royalty is paid as a condition of the sale of goods being valued. - Decided against Revenue.
Issues:
Dispute over royalty payment related to indigenous manufacture of mechanical seals and parts thereof. Analysis: The appeal challenged the order upholding the transaction value based on a licensing agreement for technology and processes. The agreement involved a one-time lump sum payment for obtaining the license and a royalty payment of 2% from the sale of products. The appellant was required to maintain manufacturing standards equivalent to the collaborator. The lower authorities concluded that the royalty payment was linked to indigenous manufacture, not procurement from related parties. The Tribunal noted the weak ground of appeal, highlighting the absence of evidence of actual imports related to the royalty amount. Referring to Customs Valuation Rules, the Tribunal emphasized that royalty could only be added to the goods' price if a condition of sale, which was not established by the Revenue. Citing legal precedents, including Commissioner of Customs Vs. Ferodo India Pvt. Ltd., the Tribunal dismissed the appeal due to the lack of proof that royalty was a condition of the sale of goods being valued.
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