9911796707
TMI Blog2018 (1) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Luxottica India Eyewear Pvt. Ltd. ("LIEPL") was engaged in the import of Sun glass, frames, their spare parts and advertising material from their holding company M/s Luxottica Itlay and its affiliates/ subsidiaries - the owners of well-known eyewear brands like Ray Ban, Oakley, Vogue, Versace, Bulgari, Prada, etc. LIEPL (the importer) is a wholly owned subsidiary of Luxottica Itlay (the supplier). The third party involved in the case was an Indian entity and another subsidiary of M/s.Luxottica Itlay, M/s.Ray Ban Sun Optics India Ltd. (RBSOIL) who were in the business of manufacturing and distributing eyewear products under the trademark Ray Ban since October,2000 using the technical know provided by Luxottica. RBSOIL was also distributin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n mentioned above. 4. The dispute now in the present appeal is with reference to payment of Rs. 5,75,22,576/- on account of trademark licence fee as a condition of sale of goods that the respondent got from RBSOIL, which RBSOIL got from Luxotica, Itlay. This amount was not being directly paid to Luxotica, Itlay, but being paid to IBSOIL. The Revenue alleged that this expense incurred by the respondent is includible in the transaction value in terms of Rule 10(1) (c ) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Accordingly, proceedings were initiated against the respondent to demand differential duty on this account. It may be noted here that the demand proceedings were also for an addition of considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement does not give a clear indication of the arrangement between them and it appears to be a ploy to circumvent the Customs Valuation provisions. (c)The licence fee of Rs. 2.75% to be paid by the respondent on sale/re-sale or distribution of all the goods imported from Luxottica Group appears to be directly tied to the sale/distribution of the imported goods. (d) The trade mark licence fee is based on the sale price of the goods imported and is, therefore, the same could not be done without payment of royalty. Such royalty is indirectly a condition of sale. (e) Payment of additional consideration to RBSOIL is mandatory, if the respondent wants to market it or sell the imported goods, which is the only purpose of importing the prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution and sales of cassettes. Payment of royalty is pre condition of sale. The other decisions relied upon by the Revenue are clearly distinguishable on facts. 7. We have heard both the sides and perused the appeal records. 8. On careful consideration of the impugned order, we note that the Original Authority has given specific attention to all the facts relevant to the case and applied the provisions of Rule 10(1)(c ) appropriately. With reference to dispute at hand, the Original Authority proceeded to examine the legal provisions in the following manner:- " 26.1 The relevant sub-rule for this issue is Rule 10(1)(c) which is the only sub-rule that deals specifically with the inclusion of royalties and licence fees. The relevant extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r payable. It is only when all these conditions are fulfilled that an amount paid or payable by the buyer as royalty or licence fees can be included in the assessable value of the imported goods." 9. The Original Authority proceeded to examine each one of the above conditions with reference to the facts of the present case. He held that the first and fourth conditions mentioned above are fulfilled in the present case. On the second condition regarding the payment could be direct or indirect, he relied on the decision of the Hon'ble Supreme Court in Ferodo India Pvt.Ltd.(supra) to interpret the term "directly". We are in agreement with the analyses made by the Original Authority with reference to non-fulfilment of conditions no.3 viz. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bution of goods in India that is linked to the payment of licence fee and not to the import. Finally, we note that the payment made by the respondent for the right to distribute or resell the imported goods should not be added to the price paid or payable for such goods, if such payments are not a condition of the sale for export to the country of importation of the said goods. We are in agreement with the conclusion drawn by the Original Authority in this regard. As correctly contested by the respondent, the grounds of appeal or case law relied upon by the Revenue do not support to the case for such addition in the import value. 11. In view of the above finding, there is no merit in the appeal by the Revenue. The same is dismissed. [Pron ..... X X X X Extracts X X X X X X X X Extracts X X X X
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