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TMI Blog2017 (12) TMI 1388X X X X Extracts X X X X X X X X Extracts X X X X ..... dered for payment of royalty, then such royalty should be added in the assessable value of imported goods. Valuation - payment of patent/software fee - the claim of the appellant is that they are reimbursing the said fee on behalf of the various patent /software owners for which agreement dated 30.05.2013 was entered into with Fujitsu Ten India Ltd., Japan - Held that: - Admittedly, these patent/softwares are required for the functional utility of the imported items as well as the finished final product. The appellants are under obligation to pay fee for the said third party patent/software. Rule 10(1)(e) of the Valuation Rules stipulates that all other payments actually made are to be made as a condition of sale of the imported goods by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of car infotainment system. The valuation of imported goods were examined by the Special Valuation Branch, New Customs House, New Delhi in terms of Circular dated 23.02.2001 of the Board. On completion of verification of various documents, the Original Authority held that royalty paid by the appellant to Fujitsu Ten Limited and Patent and Software usage fee paid are required to be added in the assessable value in terms of Rule 10 of Customs Valuation Rules, 2007. 3. The appellants contested the above finding before the Commissioner (Appeals). The Commissioner (Appeals) vide the impugned order held that the above charges are rightly includible in the assessable value and accordingly, rejected the appeal. Aggrieved by this, the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd party does not satisfy the obligation of the exporters. The ld. Counsel prayed for setting aside the impugned order. 6. Ld.AR supported the findings of the lower authorities. He submitted that the Original Authority examined in detail the scope of agreement, nature of payment made by the appellant and applicable statutory provisions under Valuation Rules. Since the royalty payment is determined based on the gross sales, which includes the cost of imported goods, the appellant cannot plead that there is no nexus between the royalty paid and the import. Similarly, the various softwares were used by the appellant, which are essential for making the imported components for integration as well as functionality. The submission of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tured goods and the importer pays royalty as a percentage of turnover of final product, which included the cost of imported components, it becomes a condition of sale of finished goods. Hence, both the conditions of Rule 9(1)(c ) of the Valuation Rules are satisfied. The Tribunal, in the case of Herbalife International India Pvt. Ltd. 2016 (341) ELT 257 (Tribunal-Mum.) and Husco Hydraulics Pvt. Ltd. 2016 (341) ELT 113 (Tribunal-Mumbai), held that when the cost of imported goods is included in the amount, which is considered for payment of royalty, then such royalty should be added in the assessable value of imported goods. 10. Regarding payment of patent/software fee, the claim of the appellant is that they are reimbursing the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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