2023 (3) TMI 1215 - AT - Customs

Tribunal excludes technical knowhow fee from assessable value of imported goods

The Tribunal upheld the Commissioner (Appeals) decision, ruling that a EURO 40,000 technical knowhow fee should not be included in the assessable value of ... Valuation of imported goods - inclusion of fee of EURO 40,000 for transfer of technical knowhow in the assessable value on import of new capital goods - whether the order passed by the Deputy Commissioner, Special Valuation Branch directing to modify the order so as not to include the technical knowhow fee to the assessable value of imported goods is legal and proper? HELD THAT:- The collaboration agreement has been perused and it is found that the transfer of knowhow and related technical assistance was not a condition for sale of the capital goods. The Hon’ble Apex Court in the case of J.K. Corporation Ltd. [2007 (2) TMI 1 - SUPREME COURT] held that Any amount paid for post-importation service or activity, would not, therefore, come within the purview of determination of assessable value of the imported goods so as to enable the authorities to levy customs duty or otherwise. The Rules have been framed for the purpose of carrying out the provisions of the Act. The wordings of Sections 14 and 14(1A) are clear and explicit. The Rules and the Act, therefore, must be construed, having regard to the basic principles of interpretation in mind. Thus, the view of the Commissioner (Appeals) that technical knowhow fee of EURO 40,000 need not be included in the assessable value of imported goods is legal and proper - appeal dismissed - decided against Revenue. Issues involved: The appeal against the order passed by the Commissioner (Appeals) modifying the Special Valuation Branch's directive to include a technical knowhow fee in the assessable value of imported goods.Summary of Judgment:Issue 1: Modification of order by the Commissioner (Appeals) The Department appealed against the Commissioner (Appeals) decision to modify the Special Valuation Branch's order regarding the inclusion of a EURO 40,000 technical knowhow fee in the assessable value of imported capital goods. The Department argued that there were no grounds to modify the order, especially when the importer confirmed no change in circumstances. The respondent argued that the technical knowhow fee was not a condition for the sale of goods based on the collaboration agreement. The Commissioner (Appeals) held that the fee should not be included in the assessable value, relying on legal precedents. The Tribunal upheld the Commissioner (Appeals) decision, stating that the fee was not related to the import of goods and should not be included in the assessable value.Key Points: - The Department appealed the modification of the Special Valuation Branch's order by the Commissioner (Appeals).- The respondent argued that the technical knowhow fee was not a condition for the sale of goods.- Legal precedents were cited to support the argument against including the fee in the assessable value.- The Tribunal upheld the Commissioner (Appeals) decision, stating the fee should not be included in the assessable value.Significant Phrases: - Special Valuation Branch's directive- Technical knowhow fee- Assessable value of imported goods- Collaboration agreement- Legal precedents- Commissioner (Appeals) decision- Tribunal's rulingThis judgment clarifies the legal and proper approach regarding the inclusion of technical knowhow fees in the assessable value of imported goods, emphasizing the importance of collaboration agreements and legal precedents in determining such matters.