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TMI Blog2015 (2) TMI 955X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) (c) specifically excludes the charges for the right to reproduce the imported goods in the country of importation as per the interpretative notes given in the schedule thereto. The World Customs Organization has also interpreted the term "right to reproduce the imported goods" as reproduced in para 2 above and as can be seen from the clarification given by the WCO, it would also include animal or plant species which are reproduced from the imported goods. More or less identical matter was considered by this Tribunal this Tribunal came to the conclusion that royalty paid for the reproduction of imported seeds in India cannot be added to the assessable value of the seeds. The same ration would also apply to the facts of the present cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant is required to pay a royalty fee to the foreign supplier/licensor per year depending upon the number of plants produced in India. The royalty paid for the production/multiplication of the goods imported in India relates to post importation activities and has nothing to do with the goods imported and therefore, the question of inclusion of royalty in the assessable value of the goods imported as a condition of sale would not arise. He further submits that in terms of Rule 10 (1) (c), the charges for the rights to reproduce the imported goods in the country of importation shall not be added to the price actually paid or payable for the imported goods while determining the Customs Valuation. However, the adjudicating and appellate autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of a scaled down model of a new type of automobile to be reproduced into other identical models), prototypes (a prototype of a new toy which will be reproduced into exact copies of the new toy) and animal or plant species (a genetically altered insect which will be reproduced to combat the spread of the original species). Thus, the clarification given by the World Customs Organization makes it abundantly clear that right to reproduce includes reproduction of animal or plant species using various scientific techniques. He also refers to a Commentary on the GATT Customs Valuation by Saul L Sherman and Hinrich Glashoff wherein it has been inter alia stated that a right to reproduce imported goods in the country of importation (including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of reproduction and therefore, it cannot be said that the activity undertaken by the appellant amounts to reproduction of the imported goods in India and therefore, the royalty paid is rightly includable in the value of the goods imported. 4. We have carefully considered the submissions made by both the sides. 4.1 We note that there is a contradiction in the stand taken by the Customs as far as inclusion of royalty on the goods imported. On the one hand it is held that if the foreign supplier is not related, royalty is not includable whereas if the foreign supplier is related royalty is includable. Rule 10 of the Customs Valuation Rule, 2007 does not make any distinction on the basis of relationship between the parties for its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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