2016 (11) TMI 86 - AT - Customs

Valuation - whether amount of royalty to be included in the assessable value? - Held that - the appellant has produced a certificate of the CA which categorically states that the royalty payment made by the appellant to M/s. Ford Motor Company, USA is excluding the amount/sales of the Mondeo cars. The appellant had clearly stated before the lower authorities that the Ford Mondeo cars is not covered under the technical agreement and the inclusion of the royalty paid seems incorrect - the adjudicating authority was correct in coming to a conclusion that the amount of royalty paid cannot be included in the assessable value. Reliance placed in the decision in the case of Saregama India Ltd. and Sony Pictures Home Entertainment India Versus Commissioner of Customs Airport, Mumbai 2016 (9) TMI 931 - CESTAT MUMBAI where it was held that the decision does not impact upon such imports which can draw a distinction between royalty on goods imported and royalty as a post-importation condition. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Inclusion of royalty amount paid to collaborator in the assessable value for customs duty on imported items.

Analysis:
The appeal was filed against an Order-in-Appeal dated 15.09.2005 regarding the inclusion of royalty amount paid to a collaborator for technical know-how in the assessable value for customs duty on Mondeo cars imported. The first appellate authority's findings were deemed misdirected as the agreement with the collaborator specifically excluded Mondeo cars from the royalty payment obligation. The appellant had consistently argued that Mondeo cars were not covered under the technical agreement, which was not considered by the lower authorities. A certificate from a Chartered Accountant supported the appellant's claim that the royalty payment excluded Mondeo cars from its calculation.

The Tribunal found that the adjudicating authority correctly concluded that the technical know-how agreement did not cover Mondeo cars, thereby rejecting the inclusion of royalty paid in the assessable value. Citing a precedent from the case of Saregama India Ltd., the Tribunal determined that the royalty amount paid could not be included in the assessable value for customs duty. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief deemed necessary.

In conclusion, the Tribunal's decision centered on the exclusion of Mondeo cars from the royalty payment agreement, leading to the rejection of including the royalty amount in the assessable value for customs duty. The judgment aligned with the precedent set in the Saregama India Ltd. case, emphasizing the correct interpretation of technical agreements in determining assessable values for customs duty.