TaxTMI Login
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →Just a moment...
AI OCR ✕Convert scanned orders, printed notices, PDFs and images into clean, searchable, editable text within seconds. Starting at 2 Credits/page
Try Now →
Press 'Enter' to add multiple search terms. Rules for Better Search
Use comma for multiple locations.
---------------- For section wise search only -----------------
Accuracy Level ~ 90%
of 
Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
of Press 'Enter' after typing page number.
of Press 'Enter' after typing page number.
All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of Press 'Enter' after typing page number.
Issues: (i) Whether royalty paid on the net sales of products manufactured in India using the foreign supplier's technical know-how was includible in the assessable value of imported yeast culture under Rule 10(1)(c) of the Customs Valuation Rules, 2007. (ii) Whether the extended period for demand could be invoked on the facts of the case.
Issue (i): Whether royalty paid on the net sales of products manufactured in India using the foreign supplier's technical know-how was includible in the assessable value of imported yeast culture under Rule 10(1)(c) of the Customs Valuation Rules, 2007.
Analysis: The agreement provided for royalty only on net sales of the finished products sold by the licensee, and not on mere import of the yeast culture. There was no stipulation that imports had to be made only from the foreign supplier, nor was royalty shown to be a pre-condition for the sale of the imported goods. The royalty was connected to post-import manufacturing and sale activity, and the rule applies only where royalty or licence fee is related to the imported goods and is payable as a condition of sale.
Conclusion: Royalty was not includible in the assessable value of the imported goods and the issue was decided in favour of the assessee.
Issue (ii): Whether the extended period for demand could be invoked on the facts of the case.
Analysis: The same technical assistance agreement and related documents had been available to the department over the years, and the dispute concerned interpretation of an already disclosed arrangement rather than concealment of material facts. The department had earlier accepted the declared values in prior proceedings, and the record did not establish suppression or wilful misstatement so as to justify invocation of the extended period.
Conclusion: Invocation of the extended period was not sustainable.
Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential reliefs, as the royalty was held not to form part of the customs assessable value and the demand could not be sustained on limitation grounds.
Ratio Decidendi: Royalty or licence fee is includible in the transaction value of imported goods only when it is related to the imported goods and payable as a condition of their sale; royalty tied to post-import manufacture and sale is not addable.
TaxTMI 
TaxTMI 
