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TMI Blog2005 (7) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... Cell in Mumbai Custom House has passed the order-in-original holding that the respondents and the suppliers are related to each other and he has ordered for loading the value of Ethyl Benzene by 1%. 2. The respondents have also imported Styrene Monomer from M/s. BASF, Singapore. On a reference from Deputy Commissioner of Customs, Surat, the Deputy Commissioner, GATT Valuation Cell has passed a similar order loading the value by 1% as in the case of Ethyl Benzene. 3. The Commissioner (Appeals) has reversed the order of the original authority with the following finding:- "The appellants are having a license know how agreement with Licensor of Germany for production of different BASF grades of polystyrene. The appellants are getting raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported raw materials, but concerned with technology for production of finished goods in India. So royalty paid is not includible in value of raw materials. In the second case relating to import of Ethyl Benzene, the appellants have demonstrated that their invoice price is higher compared to ruling prices per "ICIS Price Report", which has not been disputed by adjudicating authority. In fact price has been ordered to be accepted under Rule 4(3). Regarding payment of royalty, for the reasons given in earlier paras in view of provisions of the agreement, the same is not includible in the invoice price." 4. The grounds of appeal advanced by Revenue are as follows :- "(1) Although payment of royalty is made for the goods manufactured in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raw material it follows that the royalty is related to the imported raw materials. The invoice value of the raw material has therefore to include this percentage of royalty paid. It is also not necessary that the royalty paid is addable only if capital goods or goods of propriety nature has been imported as Rule 9(1)(c) does not make any such distinctions. (2) As per Rule 4(1) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 the transaction value of the imported goods shall be the price actually paid or payable for the goods sold for export to India, adjusted in accordance with the provisions of Rule 9 of the rules. Thus it can be seen that the transaction value can be accepted only after adjustments under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the cost of imported components. The same situation exists in the present case and as held in the case of Matsushita Television and Audio India Ltd. - 2001 (136) E.L.T. 1093 (Tri.-Del) the royalty should be added to the invoice value. (4) In the present case the value of a part of the proceeds (in the form of royalty) of subsequent resale/use of the imported goods accrues indirectly to the seller. Rule 9(1)(d) of Customs Valuation Rules, 1988 specifies that the value of any part of the proceeds of any subsequent resale or disposal or use of the goods that accrues directly or indirectly to the seller is required to be added to the declared value. Hence the royalty has to be added to the invoice value under Rule 9(1)(d) in addition to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determined the respondents and suppliers to be related to each other. But the price has not been rejected on the ground of relationship. It is also not the department's case that the relationship has influenced the price. On the contrary, as noted by the lower authorities, the prices are comparable between imports from related and unrelated suppliers. As such, this is not a case of discarding the transaction value method and applying another method of valuation. The issue before us is whether any adjustments are required to be made to the declared price in terms of Rule 9(1)(c) and Rule 9(1)(d) of the Customs Valuation Rules, 1988 by making additions for the royalty being paid by the respondents to their related suppliers. 7. The prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed goods are sold subsequently. The said sub-rule (d) is clearly not intended to cover sale proceeds of goods indigenously manufactured out of imported materials. 9. As regards application of Rule 9(1)(c), we note that only such royalty, payment of which is related to the imported goods and is made as a condition of sale of such goods can be added to the declared price. In the instant case, the payment of royalty is not related to imports of Ethyl Benzene and Styrene Monomer. It appears, the respondents do not have any obligation to import these goods only from their collaborators abroad. It has been noted by the lower authorities that they have in fact imported these goods from non-related suppliers at comparable prices. As such, it canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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