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TMI Blog2008 (8) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... uation (Determination of Price of Imported Goods) Rules, 1983. The case was referred for the clearance of "Seat A1- Front" for Chevrolet Aveo (T-Car) covered by a Bill of Entry dt. 28-1-2005. The questionnaire was issued to the importers whereby they were asked to submit various documents along with their reply; the importers submitted Memorandum and Articles of Association of the Company, Annual Report for the last three years, Commercial Invoices, Statement of import of capital goods, raw material and components/spares right from the first import till date. In their reply to the questionnaire they stated inter alia that no royalty/technical service fee has been paid so far on import of supplier of T-Car of the components. They also submitted T-Car CKD supply agreement and technology licence agreement. The Assistant Commissioner of Customs ordered loading of 25% on the invoice value of the imported goods, under Rule 8 of the Customs Valuation Rules, 1988 and in addition, proportionate loading by including technical assistance fee, in terms of Rule 9(1)(c) of the Customs Valuation Rules, 1988. The adjudication order was upheld by the Commissioner (Appeals); hence this appeal. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the same on immediate basis. PRD parts are ordered under following condition: 1. KD parts damaged in the course of GMI's manufacturing operation. OR 2. KD parts required by GMI to meet other emergency requirements due to change in production schedule. (h) The appellants import the parts on the following basis: (a) CSO parts (comprising of kits PBP parts); and (b) PRD parts. (i) For supply of CSO parts, there is an agreed time period and production lead times. CSO parts are imported as a complete kits. Further, CSO parts are ordered on a pre-agreed advance basis, giving M/s. GMDAT sufficient notice to plan and organize their production and supply schedule. (j) On the other hand, in the event of supply of parts as PRD, such parts are delivered to the aopellants on an immediate basis to facilitate continued and uninterrupted production in India. (k) In other words, when the appellants place order on M/s. GMDAT for supply of parts as PRD, it is treated as spot sales and M/s. GMDAT supply the same immediately without adhering to the usual production/delivery schedule. (k) While the appellants and GMDAT have agreed and arrived that the value of the parts and compone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /PBP was around Rs. 457 crores approximately. For the same period, import of components as PRD was around Rs. 2.81 crores. Thus, imports as PRD constituted 0.61% of the total imports from M/s. GMDAT. Hence, based on the value of PRD parts, the value of CSO part and PBP part cannot be determined. Further, on the basis of few components imported under PRD basis, all components under CSO part and PBP part cannot be valued. Commissioner (Appeals) not rebutting the same or giving a finding have to be accepted as unchallenged to arrive at a conclusion that 12.5% cannot be added" 4 . The above order has attained finality inasmuch as it has been accepted by the department. The supply agreement considered in the above order in respect of J-Car is identical in all respect to the supply agreement in the present case. Further, as per Rule 4(2)(h) of the Customs Valuation Rules, 1988, the transaction value between the related persons is acceptable under Rule 4(3)(a) or 4(3)(c). The Interpretative Notes to Rule 4(3) provide as under :- Rule 4(3) 1. Rule (3)(a) and Rule 4(3)(b) provide different means of establishing the acceptability of a transaction value. 2. Rule (3)(a) provides ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and distributing licensed parts for installation in vehicles distributed in the territory, provided, however, that in the event that GMI identifies an opportunity to source a licensed part outside India, GMI will only pursue such opportunity after discussing it with GMDAT: (b) Manufacturing vehicles at GMI's facilities in India and distributing those vehicles in the territory, and (c) Unless otherwise agreed to by GMDAT in writing, the license granted in this agreement does not include the right to (i) sub-license, or (ii) manufacture engines or transmissions for such vehicles, or (iii) distribute production of service parts relating to the vehicles outside the territory. 8 . Data has been defined in Article 1(c) of the agreement as product engineering or business information related to the assembly of Vehicles and licensed parts or which is required to conduct ancillary functions, operations and activities, as specified in Appendix D. Article 7 of the agreement sets out the terms of payment. The services rendered by the foreign supplier essentially related to manufacture and assembly of the components in India. Technology was imparted to the appellants by way of training ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods/components, in the cases of Daewoo Motors India Ltd. v. Commissioner of Customs, New Delhi [2000 (115) E.L.T. 489 (Tribunal)], Panalfa Dongwon India Ltd. [ 2003 (155) E.L.T. 287 (Tri.-LB)], Polar Marmo Agglomerates Ltd. v. Commissioner of Customs, New Delhi [2003 (155) E.L.T. 283 (Tri.-LB)], S.D. Technical Service v. Commissioner of Customs, New Delhi [2003 (155) E.L.T. 274 (Tri. LB)], Toyota Kirloskar Motor Pvt. Ltd. v. CC [2007 (213) E.L.T. 4 (S.C.) = 2007 TIOL 94 SC]. We notice that in order to overcome the above decision of the Tribunal and the Apex Court, an explanation has been provided to Rule 10(1)(c) of the Customs Valuation Rules, 2007 providing that :- "Where the royalty, licence fee or any other payment for a process, whether patented or otherwise, is includible referred to in clauses (c) and (e) such charges shall be added to the price actually paid or payable for the imported goods, notwithstanding the fact that such goods may be subjected to the said process after importation of such goods". In its Circular No. 37/07, dt. 9-10-2007 the CBEC has clarified in Para 2(iv) that the explanation to Rule 10(1)(c) was added in the context of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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