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TMI Blog2014 (5) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... be higher as assessee has to compute the royalty on the net sale value minus cost of imported raw materials -Thus, the payments made by the appellant has no nexus or relationship either with the import of goods or with the value of imported goods - Therefore, the conclusion drawn by the lower appellate authority is completely misconceived and has no basis whatsoever. Explanation in Rule 10(1)(e) is meant for different purpose altogether - The said explanation applies to goods imported which require further processing before being put to use - It is in that context the payments, if any, made for such processing is deemed as a condition of sale and includable in the value of the goods imported - That has nothing to do with the manufacturing processes undertaken subsequent to the importation and sale in India - Relying upon SGL Carbon India Pvt. Ltd. vs. Commissioner of Customs (Imports), Mumbai [2013 (11) TMI 885 - CESTAT MUMBAI] and Maruti Udyog Ltd. vs. Commissioner of Customs, Mumbai [2013 (12) TMI 90 - CESTAT MUMBAI] - If there is no nexus between the goods imported and the royalty payments made and if such payments are not a condition of sale, then royalty payments cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reight, insurance, duties, taxes and other charges and cost of raw materials, parts, components imported from the foreign Licensor or its subsidiary/affiliated company. 2.2 The question of inclusion of royalty paid by the appellant in the assessable value of the goods imported from the foreign collaborator and its affiliates were examined by the Special Valuation Branch of the Customs department from time-to-time. One such order was passed vide order dated 06/10/2005 wherein the adjudicating officer, after examining the provisions of the agreement came to the conclusion that: the royalty payment is paid on net sales value of locally manufactured goods and is not related to imported products as per agreement in place. It has no relationship with the imported components imported from the related supplier. It is payable only on the products manufactured in India by using the technology from Foseco International Ltd. Apart from the royalty on indigenous value addition it is paid for having given them the right to manufacture the product in India. There is no condition of sale in the agreement. So the Royalty cannot be related to imported goods from the collaborator/suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, it was contended that the royalty paid by the appellant would be includable in the assessable value of the goods imported inasmuch as they have been subject to various manufacturing processes in India. Similarly, it was urged that the consultancy service charge paid to the consultancy service provider is also relatable to the imported goods in terms of clause 5.2 of the agreement which read as follows: At the time of payment, the Service Recipient has the right to deduct all applicable withholding taxes due on the Consultancy Service fees and remit them to the relevant local tax authorities on behalf of the Service Provider. 2.7 The learned appellate authority, after considering the appeal filed by the Revenue came to the conclusion that: As far as the payment of Royalty is concerned, the same is made to the related supplier in terms of Agreement dated 01/07/2004 for patent right to manufacture the goods using raw material imported from the related supplier. . Therefore, the expenses incurred towards Royalty could be includible in the invoice value of the goods imported from related supplier in terms of explanation provided under Rule 10(1)(e) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said goods. 3.2 The learned counsel also relies on the decision of this Tribunal in the case of Maruti Udyog Ltd. vs. Commissioner of Customs, Mumbai 2013 (295) ELT 628 and SGL Carbon India Pvt. Ltd. vs. Commissioner of Customs (Imports), Mumbai 2013 (290) ELT 723 wherein, a more or less identical issue was considered by this Tribunal and this Tribunal held that royalty payments for the use of the trade mark is not includable in the value of the goods imported, especially when the cost of the raw materials/components imported by the appellant from the foreign principal or their affiliated companies is excluded while computing the royalty. It was further held that the royalty paid has no nexus either with the price of the imported components nor it is a condition of sale of the imported components. In view of the above decision, he submits that the impugned order is bad in law and therefore requires to be set aside and the order of the assessing officer should be restored. 4. The learned Additional Commissioner (AR) appearing for the Revenue reiterates the findings of the lower appellate authority. 5. We have carefully considered the submissions made by both the sides. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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