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TMI Blog2013 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... influenced by the assesse’s relationship with the principal - In view of such a clear and categorical finding by the assessing authority. Royalty and License Fee - The acceptance of the transaction value, the Customs authorities could not add the technical know-how fee in respect of the post-importation activities to the assessable value of the imported goods – COMMISSIONER OF CUSTOMS, NEW DELHI Versus PRODELIN INDIA (P) LTD. [2006 (8) TMI 186 - SUPREME COURT OF INDIA] - royalty and licence fee payments made, in respect of the goods manufactured and sold in India and not in respect of the raw materials/components imported and such payments being not a condition of sale of items to be imported, cannot be included in the assessable value of the imported goods under the Customs Valuation Rules – order set aside – Decided in favor of assesse. - C/1534-1535/2002 - A/904-905/2012-WZB/C-I(CSTB) - Dated:- 14-11-2012 - Shri Ashok Jindal and P.R. Chandrasekharan, JJ. Shri D.B. Shroff with Aqeel Sheraszi, Advocates, for the Appellant. Shri K.L. Goyal, Commissioner (AR), for the Respondent. ORDER These two appeals are directed against Orders-in-Appeal No. 613/2002-MCH and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms duties, etc. There is also an agreement between both the parties dated 30-6-1996 on identical terms and conditions for the Over The Counter preparations (OTC) of the principal to be manufactured and sold in India by J J India. As per the quality control clause in the said agreement, J J India will use only active ingredients and excipients which are produced by them in accordance with Licensor s specifications or which are purchased from vendors approved in advance by the licensor. 2.1 The appellant imported raw materials and capital goods for their manufacturing operations in India from the associates and subsidiaries of the parent company. They also submitted competitive quotations which revealed that the prices are based on commercial considerations and are comparable and the invoice values were not influenced by the appellant s relationship with the principal, J J, USA. Since the royalty paid by J J India is on the net ex-factory sales prices of the products manufactured in India and since J J did not import anything from J J USA, the assessing authority came to the conclusion that transaction value can be accepted and passed an order dated 11-8-2000 accordingly. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) The impugned order has been passed without any application of mind and is not a speaking order and it does not take into account the various submissions made by the appellant to the issues raised in the Review Order passed by the Commissioner. (3) In the present case there is no evidence which would sustain a finding that the payment of know-how fees and royalty is a condition of sale of the imported goods. (4) The imports were made/sourced from suppliers other than the licensor and the transfer of know-how was in no manner a pre-conditions for sale of the imported goods. These facts were led on evidence by the appellants before the original adjudicating authority by way of sample procurement invoices from suppliers and competitive price quotations from different suppliers which attested to the fact that the value was based on commercial considerations and comparable. (5) He relies on the decisions of the Hon ble Apex Court in the case of Ferodo India Ltd. [2008 (224) E.L.T. 23 (S.C.)], Toyota Kirloskar Motor P. Ltd. [2007 (213) E.L.T. 4 (S.C.)], Mitsuba Sical India Ltd. [2005 (192) E.L.T. 159 (Tri.-Chennai)] and Bridgestone India Ltd. [2012-TIOL-166-CES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l know-how is for the post- importation activity to be undertaken by the appellant in India. There is no condition stipulated in the said agreement that the appellant should procure the raw materials/components from the licensor. He is free to produce the same in India in accordance with the licensor s specifications or purchase the same from vendors approved by the, licensor. The payment of royalty has also nexus with the imported goods or its value as the royalty payment is calculated on the net ex-factory sales price of the products exclusive of excise duties, minus the cost of standard bought out components and the landed cost of imported components irrespective of the source of procurement, including ocean freight, insurance premium, customs duties, etc. Thus it is clear that the payment of royalty is linked to the value addition which takes place in India. 5.2 We find that the terms and conditions of the agreement involved in the present case is completely different from that in the Matsushita case wherein the payment of royalty was on a price which was inclusive of the value of the imported components, whereas in the present case the value of the imported goods including c ..... 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