2004 (2) TMI 612

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....ter obtaining necessary approval from the Ministry of Industrial Development and RBI. 2. The department registered a case for investigation of relationship under Rule 2(2) of Customs Valuation Rules 1988. The foreign company is having 90% of total equity capital in the Indian Company and Importer is having a Technical collaboration with overseas supplier and engaged in local manufacture of some of the product of foreign supplier. The Indian Company is importing components from the foreign supplier for the local assembly for manufacture. 3. By virtue of Technical Collaboration Agreement, the Indian company is required to pay the know-how fees and royalty to produce the licenced product and also use the word, "manufactured und....

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.... royalty paid/payable by the Indian Company to their collaborator. 2.       that the technical know-how is related to imported goods because such imports are of no value unless they are processed/ manufactured in accordance with the manufacturing process contained in the technical information supplied by the collaborator. To achieve their objective, the importer has to pay not only price of the goods but also fees for obtaining technical know-how and licence and the right to exclusive use of the same. 3.       that as per Article 15-I of Joint Venture Agreement, the Indian Company shall purchase all equipments, parts and raw materials need for manufacture of licenced products....

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.... in terms of Rule 9(1)(b) is not supported by law. (iii)   Even though the grounds of appeal refer only to Rule 9(1)(b), the applicant submits that even Rule 9(1)(c) is not applicable. (iv)   In this case, the licence fee of US$ 1,00,000 - is payable for know-how related to the manufacturing of the licence products whereas what was imported are parts and components that go into the manufacture of the licenced products and capital goods which are required for the manufacture of the licenced products. Thus the payment of licence fees is not related to the imported goods but is related to the knowledge for manufacture of the finished final products from out of parts/components. (v)     That the ....

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.... Rules 1988, which has been quoted in the grounds of appeal, is extracted below :- 9. Cost and services - (I) in determining the transaction value, there shall be added to the price actually paid or payable for the imported goods - (a)       ------------------ (b)      the value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of imported goods, to the extent that such value has not been included in the price actually paid or payable, namely :- (i)        material, components....