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TMI Blog2005 (4) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent in terms of Para 7.5 of the licensing and the technical assistance agreement. The Commissioner (Appeals) has in his findings succinctly held as follows : "Royalty of 5% is payable as per clause 7.5 of the Licensing and Technical Assistance Agreement. The Royalties are to cover both electric fencing Technical Know-how and assistance for product manufacture, plus payment for services rendered in India, both technical and marketing and the Royalty is equal to 5% of the selling price to an independent purchaser. As such, it is seen that the Royalty payable has nothing to do with the components, etc., imported nor has it been shown that the Royalty payable is a condition of sale of the imported goods. Therefore, inclusion of Royalty under Rule 9(1)(c) of the Customs Valuation Rules, 1988 is nor maintainable. Accordingly, the appeal is allowed with consequential benefits, if any." 2. Aggrieved over the Commissioner's finding Revenue has filed this appeal. 3. Smt. Shobha L. Chary, learned JCDR appeared for the Revenue and Shri G. Shivadass, learned Advocate appeared for the Respondents. 4. The learned JCDR took us through the various clauses of the agreements entered into by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Ltd. v. CC, Mumbai - 2003 (155) E.L.T. 287 (Tri.-LB) 6. Hoerbiger India Pvt. Ltd. v. CC, Mumbai - 2003 (156) E.L.T. 62 (Tri.-LB) 7. MDS Switchgear Ltd. v. CC, Mumbai - 2003 (151) E.L.T. 421 (Tri.-Mum.) 8. Himson Textiles Engg. Industries Ltd. v. CC - 2000 (117) E.L.T. 535 (S.C.) 9. UOI v. Mahindra Mahindra Ltd. - 1995 (76) E.L.T. 481 (S.C.) 7. We have gone through the records of the case carefully. According to Rule (9)(1)(c), in determining the transaction value there shall be added to a price actually paid or payable for the imported goods, - royalties and lice"(c) nce fees related to the imported goods that the buyer is required to pay, directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable." 8. A careful reading of the rule reveals that in order to determine the includibility of royalties/licence fee, the payment of royalty/licence fee should be a condition of the sale of the goods being valued. In other words, in the agreement entered, there should be a condition that unless royalty/licence fee is paid, good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Technical Know-how the party has necessarily to import from the foreign suppliers then such a condition cannot be interpreted in such a manner as to add royalty/licence fee to the Assessable value in terms of Rule 9(1)(c) of the Customs Valuation Rules, 1988. Even though the learned JCDR argued strenuously that the payment of royalty in this case is a condition of sale we are not inclined to agree with her for the reasons already stated. Hence, Revenue's appeal is rejected. (2) C/34/03 : Buhler (I) Ltd. v. CC, Bangalore : 11. The appellant has appealed against the OIA, dated 31-12-2002 passed by the CC, Chennai. In this case the Commissioner (Appeals) has given the following findings : "The claim of the appellant that the charges under Rule 9(1)(c) are not addable for reproduction of goods in India is not supported by the nature of imports which are in the form of components parts which will go into the assembly of licence products listed in Annexure III. So the Technical Know-how which is in the form of proprietary data know-how, trade secrets etc., is very much related to the imported goods as without such knowledge know-how the said import could not have been assembled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... now-how fee is not relatable to the imported goods. It is very clear that the payment of Technical Know-how fee is not a condition of sale of the imported goods, which are only components. Moreover the case law relied on by the learned Advocate are squarely applicable to the present case. Hence we allow the appeal with consequential relief. (3) C/52/03 : Hensel (I) Ltd. v. CC, Chennai : 16. This is an appeal filed against the order dated 31-12-2002 passed by the Commissioner of Customs (Appeals), Chennai, wherein it is held that the Technical Know-how fee is addable to the value of the goods, as per Rule 9(1)(c) of the Customs Valuation Rules, 1988. 17. Shri K.S. Ravishankar, learned Advocate appeared for the appellants and Smt. Shobha L. Chary learned JCDR appeared for the Revenue. 18. The learned Advocate informed the Bench that initially the Revenue proceeded against the appellant for loading of the transaction value by 20% on the ground that the appellant and the supplier are related as per Rule 2(2)(iv) of the Customs Valuation Rules, 1988. However, the Commissioner (Appeals) in his order held that the loading of the transaction value by 20% is without any basis and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals), Chennai. 22. Shri K.K. Varier, learned Consultant and JCDR for the revenue. 23. The learned Consultant urged the following points : The appellants are carrying on the business of manufacture of different types of furniture. They entered into a technical know-how agreement with M/s. Schukra Geratebau Wilhem, Austria for manufacture and sale of mechanisms for furniture using the drawings and designs supplied by the collaborator. The agreement is not for assembly and sale of furniture in India out of the semi-finished goods supplied by the collaborator. The appellants paid a lump sum payment of ATS 100000 in terms of Article 5 of the collaboration agreement towards delivery of design drawings required data for manufacturing the tools required for the manufacture of the Mechanism in India. The agreement does not provide for supply of CKD packs or any service parts. The appellants have separately imported 500 sets of SL-3 mechanism frames in CKD form only to test market the finished products made by incorporating the mechanism in India. He relied on the Tribunal's decision in the case of Birla Tyres v. Commissioner wherein it is held that payment for know-how and basic d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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