2016 (11) TMI 1136 - AT - Customs

Technology transfer agreement - valuation - royalty - related party transaction - Held that - the assessable value can be enhanced under Customs Valuation Rules, 2007 only if any amount of royalty has been paid by the appellant to the Haver Germany as a condition of sale of goods imported. If no royalty is paid then the entire exercise of determining the includability or otherwise of the royalty become infructuous. Considering the assertion of the learned Counsel that no royalty whatsoever has been paid, we set aside the impugned order and direct the finalization of assessment after due verification of the facts. If for any reason it is found that any royalty has been paid by the appellant to Haver Germany, the Revenue is free to approach the Tribunal for relief - appeal disposed off.

Summary

Issues: Customs Valuation - Inclusion of royalty in assessable value

The judgment revolves around an appeal filed by M/s. Haver Ibau India Pvt. Ltd., concerning the inclusion of royalty in the assessable value under the Customs Valuation Rules, 2007. The dispute arose from an agreement with Haver Germany for the manufacture of products in India, involving the potential payment of royalty under specific circumstances. The Additional Commissioner of Customs rejected the transaction value, deeming the appellants related to Haver Germany. The Commissioner (Appeals) upheld this decision, leading the appellants to approach the Tribunal.

The appellant contended that no royalty was paid during the agreement's duration, rendering the question of adding any amount to the assessable value irrelevant. They emphasized that as no royalty was paid due to the non-occurrence of specified circumstances, the assessment could proceed without delving into the inclusion of royalty. The appellant suggested that the lower authorities could verify these facts during the finalization of assessment.

In response, the learned Additional Commissioner of Customs argued that the verification of whether any royalty was paid needed to be conducted, as the facts were not readily available.

Upon reviewing the submissions, the Tribunal determined that under the Customs Valuation Rules, 2007, the assessable value could only be increased if royalty was indeed paid to Haver Germany as a condition of the goods' sale. Acknowledging the appellant's assertion that no royalty had been paid, the Tribunal set aside the previous order and instructed the finalization of assessment post-verification of facts. The Tribunal clarified that if it is discovered that royalty was indeed paid to Haver Germany, the Revenue could seek recourse through the Tribunal for appropriate relief.

Consequently, the Tribunal disposed of the appeal in the aforementioned terms, providing clarity on the inclusion of royalty in the assessable value under the Customs Valuation Rules, 2007.

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