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TMI Blog2024 (2) TMI 1096X X X X Extracts X X X X X X X X Extracts X X X X ..... r rejected all other methods has arrived at the loaded value as per Rule 9 which is last in the sequence. The Commissioner having rejected this method of enhancement of value cannot remand the case for redetermination under any other method as it has already attained finality and there is no appeal on that method of valuation. Hence the remand to redetermine is not sustainable and hence set aside. Addition of payment made towards royalty under Rule 10(1)(c) of the Customs Valuation Rules, 2007, law is well settled that addition of payment made towards royalty can be made only in cases where the goods have been manufactured from the raw material imported by using the trade secret license under License agreement. The Royalty is not payable in instances of trading of imported finished goods and on goods repacked in India and it is only for use of technology to produce the products in India. Admittedly the royalty has been paid for use of technology to produce the products and it is payable on the net value of the goods manufactured in India and therefore, royalty cannot be added to the finished goods imported by the appellant for trading purpose. Thus, in view of the settled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner (Appeals) partially allowed the appeal by setting aside the loading of import value by 100% and additional royalty of the assessable value. However, Commissioner (Appeals) upheld the rejection of declared value and remanded the matter for re-determination of the assessable value and to decide the issue of addition of payment made towards royalty as per Customs Valuation Rules, 2007. Aggrieved by the same, present appeal is filed. 2. When the appeal came up for hearing, Learned Counsel for the Appellant submits that the though it is not disputed that overseas supplier and the Appellant are related to each other as the Appellant is 100% subsidy of foreign supplier, price declared by the Appellant is not influenced by the relationship between the Appellant and the Supplier; therefore, transaction value has to be accepted in the present case. Learned Counsel for the Appellant also drew our attention to the relevant provisions of Section 14 of the Customs Valuation Rules, 2007 and submitted that in Appellant s case, none of the circumstances specified in the Rule 3(3)(a) of the Customs Valuation Rules, 2007 are present except for the fact that the Appellant and the foreign su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.1 The Learned Counsel further submits that if at all the Respondent resort to residuary method of valuation of goods under Rule 9 of the Customs Valuation Rules, 2007, it has to be done by reasonable means. The declared price of the goods may still be adopted as such identical goods are exported at the same price to countries other than India by M/s Chem Trend, USA. Though the Appellate authority has set aside the loading of 100% and addition of in the assessable value, upheld the rejection of declared value and remanded for redetermination of the value. Learned Counsel submits that royalty is payable only in cases where the goods are manufactured from the raw materials by using the trade secrets licensed under the license agreement. The Royalty is not payable in instances of trading of imported products and on goods repacked in India but only for use of technology to produce the products in India. It is also claimed that the law is well settled that where royalty is paid for grant of license to manufacture goods in India, the said royalty is not related to the imported goods and it is not a condition of sale of the imported goods and is therefore not to be included in the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings in the impugned order wherein the appellate authority upheld the rejection of invoice value and remanded the matter for redetermination of the assessable value. He also relied on the decision of Apex court in the matter of Matsushita Television Audio (I) Ltd Vs CC (2007 (211) ELT 200 (SC). 4. Heard both sides. In the present case, appellant had filed petition before the SVB Chennai by producing sufficient documents to substantiate the transactional value declared by them at the time of import. However, the Assistant Commissioner, SVB Bangalore ordered loading of 100% value on the declared price along with addition of payment made towards royalty. The Original Authority rejects the transaction value only on the ground that related suppliers are giving variable discounts which is in the nature of special discount and therefore, the invoice price is not at arm s length and hence rejects the transaction value. The comparative chart produced by the appellant with regard to the pricelist with the invoice price admittedly shows an average difference of 2%. Similar is the case when compared with the import prices of another related party. On appeal before the Commissioner (A), h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed value for identical goods or similar goods: Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of rule 10 and cost incurred by the seller in sales in which he and the buyer are not related; (c) substitute values shall not be established under the provisions of clause (b) of this sub-rule. (4) if the value cannot be determined under the provisions of sub-rule (1), the value shall be determined by proceeding sequentially through rule 4 to 9. As seen from above, the 2% variation in the prices demonstrated by the appellant in the tables given below do not reflect as abnormal discounts to reject the transaction value. The Department has also not produced any evidence to show any financial flow back on account of the relationship. Thus, there is no reason to reject the transaction value in the present case. 4.1 Rule 12 of the Customs valuation Rules reads as: (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and profits and whether the transaction value can be rejected. It is now well settled that merely because the importer and the appellant is a related person and that by itself will not call for rejection of transaction value unless it is shown that the transaction is not at arm s length and there is flow back of funds. In this particular case, the appellant has produced enormous documents to show that the pricing has been uniform worldwide in respect of transaction between affiliates. The price at which the goods are bought and sold inter se affiliates of P G is cost of raw materials and packing materials (including wastage), manufacture, overheads, logistic cost and uniform profit of 5% which the appellant refer it as Inter Company Billing Policy (ICBP). In support of this they have produced certificate issued by P G (USA) and certificates of the Chartered Accountants who is internationally reputed and who has examined independently. Therefore, as the Department has not produced any evidence to say that the transaction value cannot be rejected for any criteria there is no reason to reject the transaction value in the present case. We have gone through the impugned orders passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstrate that the transaction value closely approximates to a test value. A number of factors, therefore, have to be taken into consideration in determining whether one value closely approximates to another value. These factors include the nature of the imported goods, the nature of the industry itself, the difference in values etc. As stated above, Rule 4(3)(a) and Rule 4(3)(b) of the CVR, 1988 provides for different means of establishing the acceptability of a transaction value. In the case of Matsushita Television (supra) the pricing arrangement was not produced before the Department. In our view, the Consideration Clause in such circumstances is of relevance. As stated above, pricing arrangement and TAA are both to be seen by the Department. As stated above, in a given case, if the Consideration Clause indicates that the importer/buyer had adjusted the price of the imported goods in guise of enhanced royalty or if the Department finds that the buyer had misled the Department by such pricing adjustments then the adjudicating authority would be justified in adding the royalty/licence fees payment to the price of the imported goods. Therefore, it cannot be said that the Consid ..... 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