2023 (12) TMI 693 - AT - Customs

Valuation - addition of royalty to value of the imported goods - Rule 10(1)(C) OF Customs Valuation Rules - Power of the Commissioner (Appeals) - HELD THAT - The learned Commissioner (Appeals) vide the impugned order has concluded that going by the agreements, the payment of royalty can be certainly said to be not related to imports. Having come to such a conclusion, it is found that he has erred by still remanding the matter to the lower authority for a decision afresh instead of rejecting the departments appeal. He compounded his error by going on to mention that the scrutiny of cost structure of all the facilities from where the goods were imported was necessary to be done by the lower authority while allowing the appeal of the department. The Commissioner (Appeals) cannot examine and pronounce upon any issue beyond the factum of the appeal. It is imperative that all actions of public functionaries be guided by reason and not by whim or caprice - it is found that the directions given in the impugned order is improper and travels beyond the appeal. The issue of royalty not being related to the impugned goods during the said period has become final as no cross objections have been filed on the issue by Revenue. The portion of the impugned order giving directions to the original authority while remanding the matter is set aside - Appeal allowed.

Summary

Issues involved:
1. Valuation of imported goods in relation to royalty payment.

Summary:

Issue 1 - Valuation of imported goods in relation to royalty payment:
The appellant imported goods from group companies of Nissan, and the Special Valuation Branch raised concerns about the influence of the relationship on the transaction value. The adjudicating authority held that the royalty paid by the appellant to Nissan Ashok Leyland Technologies Ltd. was not part of the value of imported goods. The Department contended that the royalty should be added to the value under Rule 10(1)(C) of Customs Valuation Rules, indicating a nexus between imports and final product manufacture. The Commissioner (Appeals) remanded the matter for further scrutiny, leading to the appeal before the Tribunal. The appellant argued that the Commissioner (Appeals) erred in remanding the matter as the royalty payment was deemed unrelated to imports. The Tribunal found that the Commissioner (Appeals) exceeded the appeal's scope by directing further scrutiny of cost structures, which was unnecessary. As no cross-objections were filed by the Department on the royalty issue, the Tribunal set aside the directions given in the impugned order and allowed the appeals.

This judgment by the Appellate Tribunal CESTAT Chennai dealt with the valuation of imported goods concerning royalty payment. The case involved disputes regarding the influence of the relationship between the Indian company and foreign company on the transaction value of imported goods. The adjudicating authority initially ruled that the royalty payment to Nissan Ashok Leyland Technologies Ltd. was not to be included in the value of imported goods. However, the Department appealed, arguing that the royalty should be added to the value under Rule 10(1)(C) of Customs Valuation Rules, suggesting a connection between imports and final product manufacture. The Commissioner (Appeals) remanded the matter for further examination, prompting the appellant to approach the Tribunal. The Tribunal observed that the Commissioner (Appeals) had overstepped the appeal's boundaries by ordering additional scrutiny of cost structures, which was deemed unnecessary. As the Department did not file any cross-objections on the royalty issue, the Tribunal set aside the impugned order's directions and allowed the appeals, providing consequential relief as per the law.