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TMI Blog2014 (1) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... mported items. No effort was made by the Department to ascertain enhancement of royalty/licence fees by reducing the price of the imported items. In the circumstances, we find no infirmity in the impugned judgment of the Tribunal. In this case, the Department has gone by TAA alone. On reading TAA in entirety, we are of the view that there was no nexus between royalty/licence fees payable for the know-how and the goods imported for the manufacture of licensed products. The Department itself has invoked Rule 9(1)(c) - Following decision of Commissioner of Customs v. Ferodo India Pvt. Ltd. [2008 (2) TMI 12 - Supreme Court] - Decided in favour of assessee. - C/578/2004 - Final Order No. A/165/2012-WZB/C-I(CSTB) - Dated:- 14-2-2012 - Shri Ash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties have agreed on the terms and conditions separately decided, to source the parts from India, as per Article 5 YGC-LS approval will be required for purchase of parts from any other third party-supplier and on the ground that the appellant submitted worksheet/declarations provided by their supplier stating that the price of goods include cost of material plus overhead plus profit margin, however, there was no supporting documents filed by the importer to this effect. He further submitted that the value addition cannot be done on both these grounds. As per Article 5, approval was required for subsequent purchase of goods which are to be sourced from India and the appellant has produced the worksheet and declarations showing how the cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the rate of three percent (3%) of the Net Selling Price on for export sales, if any, of the Products. The royalty payments shall be made net of taxes. On going through the said provision of the agreement, we find that the royalty is being paid on the goods manufactured by the appellant to their principal supplier of the raw material. In the case of Ferodo India Pvt. Ltd. (supra) the Hon ble Apex Court has dealt with the issue and has observed as under : 18. Royalties and licence fees related to the imported goods is the cost which is incurred by the buyer in addition to the price which the buyer has to pay as consideration for the purchase of the imported goods. In other words, in addition to the price for the imported goods the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be right in including the cost of royalty/licence fees payment in the price of the imported goods. In such cases the principle of attribution of royalty/licence fees to the price of imported goods would apply. This is because every importer/buyer is obliged to pay not only the price for the imported goods but he also incurs the cost of technical know-how which is paid to the foreign supplier. Therefore, such adjustments would certainly attract rule 9(l)(c). Application of Rule 9(l)(c) to the facts of the present case 19. Applying the above tests to the facts of the present case, we find that the adjudicating authority had not examined the pricing arrangement between the foreign collaborator and the buyer. It has only examined the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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