TaxTMI 
TaxTMI 
2013 (9) TMI 462
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....e available to the Indian subsidiary technological assistance and service and the benefits of its continuing research and development efforts and in particular, shall advise and assist the Indian subsidiary,- (1) selection and introduction of new products relating to drugs and pharmaceuticals or in any other core industrial sector of the Indian market; (2) adoption of the products to suit the Indian market conditions and requirements; (3) technical audit of the Indian subsidiary's manufacturing and productions processes and facilities; (4) advise on a continuous/ongoing basis improvement that may be made with regard to manufacturing and process of J&J (India)'s products and update technical documentation already provided; (5) assist on technological upgradation of all manufacturing facilities by way of periodic quality assurance audit, periodic visits to the plants, innovating and updating quality assurance procedures, sterilization procedures, quality improvement package from the in-house institute of quality management, waste water management, air pollution management, solid and liquid waste management, etc. Further the principal also undertakes to train at its laboratories, plan....
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....ical know-how is used to process the imported goods for manufacturing of the final products, royalty payment is a condition of sale for the imported goods and hence, the same must be included in the assessable value of the goods in terms of Rule 9(1) of the Customs Valuation Rules, 1988. Accordingly he filed an appeal before the lower appellate authority for correct determination of value of the imported goods. The lower appellate authority observed that "as per article 1 of the agreement, "net sales" of a product shall mean net ex-factory sales price of the products exclusive of excise duties, minus the cost of standard bought out components and the landed cost of imported components irrespective of the source of procurement, including ocean freight, insurance premium, customs duties, etc. It is therefore evident that "Net Sales" and "Net ex-factory sale" price are different prices. Payment towards technical assistance fee and royalties payments are not "Net Sale" and therefore, it is necessary to examine in detail how the value for calculation of above fees has been arrived at by the respondents. There is no mention in the finding of the lower authority that he has examined this ....
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....of sale for the imported goods. He relies on the decision of this Tribunal in the case Matsushita Television and Audio India Ltd. [2001 (136) E.L.T. 1093 (Tri.-Del.)] which was affirmed by the Hon'ble Apex Court in 2007 (211) E.L.T. 200 (S.C.). Accordingly he pleads for upholding the order of the lower appellate authority. 5. We have carefully considered the submissions made by both the sides. 5.1 From a perusal of the agreement, it is quite clear that the technical know-how is for the manufacture of licensor's products by the licensee in India for which the licensor has agreed to provide technological assistance and service and the benefits of its continuing research and development efforts. In particular, the licensor shall advise and assist the Indian subsidiary in, - (1) selection and introduction of new products relating to drugs and pharmaceuticals or in any other core industrial sector of the India Market; (2) adoption of the products to suit the Indian market conditions and requirements; (3) technical audit of the Indian subsidiary's manufacturing and productions processes and facilities; (4) advise on a continuous/ongoing basis improvement that may be made with regar....
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....er hand we find that the ratio of the decision of Hon'ble Apex Court in the Ferodo India Pvt. Ltd. case is more relevant to the facts on hand. In the said case, the Hon'ble Apex Court held that in the absence of any evidence showing existence of a price adjustment between the cost incurred by the buyer on account of royalty/licensee fees by reducing price of imported items, it can- not be that such royalty payments are includible in the assessable value of the imported goods under Rule 9(1)(c)/10(1)(c) of the Customs Valuations Rules, 1988/2007. In the present case, from the records it is seen that the appellant does not import any goods from the licensor/supplier of technical know-how at all. Further the assessing authority has recorded a clear finding that the appellant had submitted competitive quotations which revealed that the prices (at which they procured the goods from suppliers who are affiliated to the same principal) are based on commercial considerations and are comparable and the invoice values were not influenced by the appellant's relationship with the principal, J&J, USA. In view of such a clear and categorical finding by the assessing authority, we do not find any ....