9911796707
TMI Blog1999 (9) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants in whom 80% of their shares are held by their foreign technical collaborating company namely M/s. Hitachi Koki Company Ltd., Tokyo, Japan. Appellant mostly imports various items from this company for the purposes of manufacture of their final products in their factory in India. The order-in-original has noted that agreement between the appellants and the foreign supplier includes two other payments to be made by the appellants to the foreign company over a period of time. The agreement between these two companies is for a period of seven years starting from 9-4-1996. The first item on which the payments are to be made to the said foreign company by the appellants is in the form of technical lumpsum know-how fees which, acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest because while the foreign company may have interest in the Indian Company because it holds 80% of their shares, however reverse of this does not exist because neither Indian company holds any shares in the foreign company or any of its related subsidiaries nor does Indian company any rights in law to represent itself in the Board of foreign company or in any other way interfere in the financial and managerial affairs of that company. In the absence of this two way traffic of mutuality of interest, mere relationship in view of 80% shares held, would not lead to discarding the transaction value as declared on each Bill of Entry concerned. Ld. Advocate further adds that if this be so, then the issue of payment of know-how fees or roy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these goods. Secondly, Ld. DR submits that while the lumpsum technical know-how fees is to be paid over a period of three year instalments the payments of royalty is to be continued till currency of this agreement between the two parties which is going to be in currency for 7 years from 9-4-1996. On the date of passing of the order-in-original, this period has not expired. Also the goods continue to be imported under this agreement and will continue to be imported in future also. He therefore submits that it may not be possible to accurately compute at this stage the total amount of royalty payable during the entire period of currency of this agreement and hence any quantification of the sums at this stage could involve the risk of loss o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to finalise the assessment while loading the assessable value may result in serious inaccuracies inasmuch as the royalty payments cannot be quantified at this stage as they depend on the turnover of sales of finished products produced during the currency of this agreement. The agreement has still many years to expire. Therefore any attempt to compute the loading factor would still be an exercise of approximation and not an exercise of actuality. While this observation may not be true with respect to the fixed amounts of lumpsum technical know-how fees which are to be paid in three annual instalments, it is certainly true in the case of royalty payments. 7. In view of the aforesaid findings and analysis, we are of the considered opinion t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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