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TMI Blog2025 (2) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 ('CVR, 2007'). However, the Deputy Commissioner held that 4% running royalty paid on the net sales value of the manufactured products should be included in the transaction value of the good imported as per Rule 10 (1) (c) of CVR, 2007. 3. The aforesaid OIO No.14237/2011 dated 21.01.20111 was upheld by the Commissioner of Customs (Appeals), vide OIA No.667/2013 dated 25.04.2013. Therefore, aggrieved by the OIA dated 25.04.2013, the Appellant has filed the Appeal No.C/40785/2014 before Tribunal. Appeal C/40155/2015 4. The Appellant filed an application dated 24.12.2012 before SVB for renewing the Order dated 21.01.2011 , since the order was valid only until 28.12.2012. The Deputy Commissioner, vide OIO No.23194/2013 dated 26.12.2013, directed inclusion of running royalty in the assessable value of the imported goods. However, the Deputy Commissioner has held that transaction value is acceptable. 5. The aforesaid OIO No.23194/2013 dt. 26.12.2013 was upheld by the Commissioner of Customs (Appeals), vide OIA No.1747/2014 dt. 25.09.2014. The said OIA dt. 25.09.2014 is challenged in Appeal No.C/40155/2015. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance in this regard was placed on para 6.2 of the Agreement between the parties. 6.3 From the Grounds of Appeal in the Appeal Memorandum and upon hearing the Ld. Advocate, it is the case of the appellant that the Agreement is for grant of license to manufacture and sell the products specified in the said agreement using the technology of the licensor. Hence, Royalty for the same was paid by the appellant in accordance with the terms of the above Agreement. The Royalty is payable on the net sales of manufactured goods undertaken by the Appellant and hence, Royalty is clearly relatable to the goods manufactured in India and sold. It therefore does not cover 'sale' of goods alone. What is more relevant in the 'manufacturer' using the technology for which Royalty is paid. 6.4 There is a reference to definition clause in the said Agreement including the term 'Royalties'. It is thus averred that in the instant case the running Royalty was paid for obtaining the know-how to manufacture products viz., reinforcement Glass fiber products and composite products in the factory of the appellant in India. It was therefore claimed that Royalty so paid by them was not in connection with the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be paid irrespective of whether goods were imported or not as the same was dependent on sale of the products manufactured by them using the know-how. Hence, the very fact that Royalty was payable even when no goods were imported would prove that Rule 10(1)(c) ibid was not invocable. 6.8 Insofar as the procurement of raw materials from others in relation to those products for which know-how has been provided to the Appellant, the primary material viz. minerals were not even imported but procured locally and the chemicals were purchased from global vendors who were unrelated parties which facts stand undisputed. In this regard, it was urged that the documentary evidence demonstrates that they had procured raw materials from unrelated suppliers, locally. Reliance has been placed in this regard on an order of Mumbai Tribunal in the case of ABB Ltd. Vs CC (Import) Mumbai - 2013 (288) ELT 296 (Tri.-Mumbai). Insofar the applicability of Explanation to Rule 10(1) ibid read with Circular No.38/2007 -Cus. dated 09.10.2007 is concerned, the same would not help the Department in any manner, but surprisingly, in the impugned order, the Commissioner (Appeals) does not even refer to the Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue's contention in this regard was that for the purpose of calculating Royalty, value of the goods imported is considered, it is claimed that the same was not paid on the value of the imported goods but on the net sales. If it is so, then there is no logic in considering the value of imported goods since, as argued, the imported goods or its value has nothing to do with the payment of Royalty, which is to be paid only on the net sales price of the finished product. 8. Ld. Advocate placed reliance on an order of Mumbai Tribunal in CC Mumbai Vs BASF Strenics Pvt. Ltd. - 2006 (195) ELT 206 (Tri.-Mumbai) which was affirmed by the Apex Court in CC Vs Ferodo India Pvt. Ltd. reported in 2008 (224) ELT 23 (SC). 9. After considering the rival contentions and perusal of documents placed on record, the following points are the crux of appellant's case: (i) the Agreement referred to is for the transfer of the licensor's 'Advantix Technology' to the Appellant-importer for the purpose of manufacturing and selling the subject goods in India; (ii) Subject goods are reinforcement Glass Fiber Products and Composite Products; (iii) The Royalty/license fee was not related to the imported g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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