TaxTMI 
TaxTMI 
2015 (2) TMI 646
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..../SVB/SKR/2010-11 dated 31/08/2010 passed by the Additional Commissioner of Customs (I), GATT Valuation Cell, Mumbai, wherein the said authority had come to conclusion that the lumpsum trademark fee of US $0.5 mn and lumpsum royalty for technical knowhow of US $1.5mn should be proportionally added to the value of imports made by the appellant, M/s. Can-Pack India Pvt. Ltd., from the related overseas suppliers, M/s. Canpack ME, UAE, M/s. Canpack Romania SRL, Romania and M/s. Canpack SA, Poland. Aggrieved of the same, the appellant is before us. 2. The learned Counsel for the appellant made the following submissions: 2.1 The appellant, M/s. Can-Pack India Pvt. Ltd. had entered into two agreements with their related principals situated ab....
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....vided for a clause that the "present frame contract does not intend to bind the buyer in any manner whatsoever to curtail its ability to procure goods from persons other than the seller in the international market. Although this option, the buyer is still obliged to ensure it does not compromise on the Can Pack group's quality standards vis-a-vis finished product". The Revenue was of the view that inasmuch as the appellant procured bulk of their raw-materials requirements from the related foreign entities, the lump sum payments for trade mark usage and royalty for the technical know-how is a condition of sale for the purchase of raw-materials from the related foreign entities and therefore, it should be added on a proportionate basis to....
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.... know-how for manufacture of goods in India in the assessable value of the parts and components to be supplied as mutually agreed price was considered. In the first two cases the appellants imported parts and components and in the Mahindra & Mahindra Ltd. case the appellant therein imported CKD packs of engines for manufacture of motor vehicles in India for which technical know-how was supplied by the foreign collaborators from whom the engines were imported. The Hon'ble Apex Court and this Tribunal, in the context of those cases, held that these are two independent transactions. The payment of royalty for supply of technical know-how is for the manufacture of goods in India, whereas for the purchase of components/CKD packs of engines, ....
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....hnical know-how supply agreement and also the agreements for supply of raw-materials entered into by the appellant with the related foreign entities. From the trade mark usage agreement, it is clear that the fee is paid for the use of trade mark on the goods/semi-finished goods manufactured in India. The payment of consideration is split into two modes; one by way of lumpsum payment of US $ 0.5 mn and another by way of running royalty as a percentage of sale value of the manufactured goods. Similarly, in the case of technical know-how agreement, the consideration is paid for supply of technical know-how and for training the personnel of the appellant in the manufacturing activity to be undertaken in India. The consideration is paid in two m....
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....l as a running royalty of 10% of the sale value of the goods manufactured. There was also agreement for purchase of parts and components to be supplied at a mutually agreed upon price. The Revenue contended that the royalty paid should be added to the assessable value of the goods inasmuch as the entities were related. This contention was negative by this Tribunal holding that payment of royalty has nothing to do with the supply of components or on the price of the components and inasmuch as the foreign company had no controlling interest in the Indian buyer, the royalty paid cannot form part of the price for the supply of components. Similarly, in the case of Hindustan Motors Ltd. case, there was an agreement for supply of technical know-h....