TaxTMI 
TaxTMI 
2014 (5) TMI 203
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....ed 26/08/2011 and has held that the royalty paid by the appellant, M/s. Foseco India Ltd., is a consideration and condition of sale for their imports from the foreign collaborator/group entities and therefore, should be added to the declared value for determination of duty liability in terms of Rule 10(1)(e) of the Valuation Rules, 2007 (CVR in short). Aggrieved of the same, the appellant is before us. 2. The facts relevant to the case, briefly, are as follows: 2.1 The appellant, M/s. Foseco India Ltd. (Foseco for short) is a manufacturer of additives and consumables which are used in the iron and steel industry. They entered into agreement dated 01/07/2004 whereby M/s. Foseco International Ltd. UK, granted to the Indian entity, namely, M....
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....plier. It is payable only on the products manufactured in India by using the technology from Foseco International Ltd. Apart from the royalty on indigenous value addition it is paid for having given them the right to manufacture the product in India. There is no condition of sale in the agreement. So the Royalty cannot be related to imported goods from the collaborator/supplier." 2.3 In view of the above finding, it was held that the royalty paid by the appellant is not includable in the assessable value of the goods imported. This decision of the assessing officer was also accepted by the Review authority. The agreement was once again a subject-matter of examination by the Customs authorities and vide order dated 13/08/2008, it was once a....
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....in India is includable value in view of the explanation given under Rule 10(1)(e) of the Customs Valuation Rules, 2007 which read as "Explanation.- Where the royalty, licence fee or any other payment for a process, whether patented or otherwise is includible referred to in clauses (c ) and (e), such charges shall be added to the price actually paid or payable for the imported goods, notwithstanding the fact that such goods maybe subjected to the said process after importation of such goods." 2.6 Accordingly, it was contended that the royalty paid by the appellant would be includable in the assessable value of the goods imported inasmuch as they have been subject to various manufacturing processes in India. Similarly, it....
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....d the impugned order has not discussed this aspect at all. There is no scrutiny of the pricing pattern which is relevant to the relationship. .... ....... The adjudicating authority should have verified the payment of service tax and withholding tax to confirm that the payments are towards services and not for imported goods." 2.9 In view of the above, the lower appellate authority came to the conclusion that the royalty and the consultancy fee paid are relatable to the imported goods and are in fact, a condition for sale and, therefore, these charges should be added to the value of the goods imported so as to arrive at the assessable value under Rule 10 of CVR, 2007. 3. The learned counsel for the appellant made the following submissions....
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....re or less identical issue was considered by this Tribunal and this Tribunal held that 'royalty payments for the use of the trade mark is not includable in the value of the goods imported, especially when the cost of the raw materials/components imported by the appellant from the foreign principal or their affiliated companies is excluded while computing the royalty. It was further held that the royalty paid has no nexus either with the price of the imported components nor it is a condition of sale of the imported components. In view of the above decision, he submits that the impugned order is bad in law and therefore requires to be set aside and the order of the assessing officer should be restored. 4. The learned Additional Commissioner ....
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....ver. 5.1 As regards the reliance placed on the explanation in Rule 10(1)(e), that explanation is meant for different purpose altogether. The said explanation applies to goods imported which require further processing before being put to use. It is in that context the payments, if any, made for such processing is deemed as a condition of sale and includable in the value of the goods imported. That has nothing to do with the manufacturing processes undertaken subsequent to the importation and sale in India. Therefore, the reliance placed on explanation given under Rule 10(1)(e) of CVR, 2007 also does not support Revenue's case. 5.2 We find that in the case of SGL Carbon India Pvt. Ltd. and Maruti Udyog Ltd. (supra) this Tribunal has tak....