9911796707
TMI Blog2005 (5) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-2-1998 and Component Supply Agreement of even date were entered into between the Joint Venture Company and M/s. Komatsu Ltd., Japan ( Komatsu , for short). The License and Technical Assistance Agreement (LTA agreement, for short) and the Component Supply Agreement ( CS Agreement , for short) were ancillary to the Joint Venture Agreement vide Clause 16.1 of Article 16 read with Clause 1.2 of Article 1 of the JV Agreement. Clause 10.1 of the Joint Venture Agreement laid down that the JV Company shall, besides continuation of the manufacture of L T Products, start manufacturing Models of Komatsu PC200-6Z and PC-200LC-6Z and, subject to viability, PC 120-6Z and PC300-6Z, as the initial products. It was envisaged under this provision of the Agreement that the Joint Venture Company should endeavour to start commercial production within 18 months and 24 months respectively. The above provision of the JV agreement also enabled the parties to expand the scope of their manufacturing activities so as to encompass other Komatsu models of hydraulic excavators. Clause 24.6 of Article 24 of the JV Agreement provided for termination of the agreement by a non-defaulting party in the event of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing products in accordance with the LTA Agreement. Clause 16.11 of Article 16 of the CS Agreement stated thus : This Agreement shall extend to all the LTAs, but nothing in this Agreement shall be deemed to modify or amend any provisions of the LTAs. Contextually, it is noticed that Article 13 of the LTA Agreement dated 1-2-1998 also dealt with supply of Komatsu components to the JV Company and stipulated that the JV Company shall use Komatsu components for the manufacture of Company products only. The terms Komatsu Components and Company product as well as the terms Components , Licensed Components , Licensed component parts , Licensed Product etc., were all defined under Article 1 of the LTA Agreement. 2. The Joint Venture Company, namely, L T Komatsu Limited is the appellant in the present case. They imported components from Komatsu under the CS Agreement for the purpose of manufacture, in India, of Komatsu models of hydraulic excavators. The transaction value of these components did not include the disclosure fee of 21 Million Japanese Yen. The Dy. Commissioner of Customs (Special Valuation Branch) rejected the transaction value after holding that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable. Both sides have agreed that the disclosure fee paid by the appellants to their technical collaborator under Article 10 of the LTA Agreement is covered by Licence Fees mentioned in the above provision. In order that the disclosure fee may be held to be includible in the assessable value of the imported components, two conditions must be cumulatively satisfied. Firstly, it has to be found that the disclosure fee was related to the imported goods. Secondly, it has to be established that the fee was required to be paid, directly or indirectly, as a condition of sale of the said goods. A careful and meticulous reading of the above agreement is necessary to find out as to whether the above two conditions were satisfied in this case. It has been argued by ld. Counsel for the appellant that the disclosure fee was related only to the licensed product (hydraulic excavator) and was not in any way related to the imported components. It has also been submitted that the payment of disclosure fee was not, directly o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar Gujarat Ltd. [1996 (88) E.L.T. 609 (S.C.). 4. Admittedly the disclosure fee was paid by the appellant as a consideration for the transfer, to them by their technical collaborator (Komatsu), of Technical know-how required for the manufacture of Komatsu models of hydraulic excavators. These hydraulic excavators, which were to be manufactured by the appellant by using the technology granted under the LTA Agreement, are referred to as Komatsu products vide Article 1.13 of the JV Agreement. These very products are referred to as licensed products in the LTA Agreement vide Article 1.5 thereof. Article 1.7 of the LTA Agreement terms Komatsu components as such components as are supplied by Komatsu to Company (appellant) pursuant to Article 13 thereof . As per article 1.11 of this agreement, Company products include licensed products, licensed components and licensed spare parts manufactured by the appellant as also other licensed components and licensed spare parts purchased by the appellant from their suppliers other than Komatsu. The licence granted by Komatsu to the appellant under Article 2.1.1 was an exclusive licence to utilise technology in the form of technical docume ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
