2004 (8) TMI 230 - AT - Customs

Tribunal excludes technical fee from assessable value, rules appellants not related persons.

BARBOUR VARDHMAN THREAD LTD. Versus COMMISSIONER OF CUSTOMS, DELHI

The Tribunal found that the appellants and a group were not related persons under Rule 2(2)(iv) of the Customs Valuation Rules as there was no evidence of ... Valuation (Customs) - Related persons - Assessable value Issues involved:1. Whether the appellants and a group are related persons.2. Whether the technical know-how fee paid should be included in the assessable value of imported goods.Analysis:1. Related Persons Issue:The appeal revolves around determining if the appellants and a group are related persons under Rule 2(2)(iv) of the Customs Valuation Rules. The appellant company is a joint venture between two entities with equal 50% holding. The Revenue treated them as related persons and increased the assessable value by 10%. The appellant argued that the rule requires a third person owning stock in both entities for the relationship to apply. Citing a previous case, they contended that the presence of a third person is necessary. The Tribunal found no evidence of such ownership or control, concluding that the entities are not related persons as per the rule.2. Inclusion of Technical Know-How Fee:Regarding the technical know-how fee, the appellant argued that the fee was for manufacturing processes unrelated to the imported goods. They emphasized that the technical collaboration agreement was independent and not a condition for the sale of capital goods. The Revenue failed to provide evidence that the fee was a condition of the sale. The Tribunal referred to a previous case where it was held that payments for licensed information unrelated to the working of the plant should not be included in the price of imported goods. As no evidence was presented, the Tribunal ruled that the technical know-how fee should not be included in the assessable value, setting aside the impugned order and allowing the appeal.