TaxTMI 
TaxTMI 
2015 (11) TMI 1504
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....clared invoice values for the years 2008-2009 to 2011-2012 by varying percentages. 2. The appellant is engaged in the manufacture of machine tools and tool bits. They imported various raw materials/capital goods from M/s. Sandvik and their Associated Companies, namely Sandvik Materials Technology and Sandvik Mining and Construction who are related to them in terms of the definition of related persons under Rule 2(2) of the Customs Valuation Rules, 1988 and 2007. For many years starting from 1992, it was held by the Customs that the relationship between exporter and appellant has not influenced the price of the imported goods. Special Valuation Branch (SVB) orders of 1992, 2006, 2009 continued to hold this view. However, at the time of re....
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....nts are: (i) The Order-in-Appeal is vague, cryptic and non-speaking. (ii) The loading of value has been done in respect of royalty paid for use of the trademark only on the ground that the value of imported goods has been taken into account in determination of royalty, which is not correct. (iii) Inclusion of royalty in the value of imported goods is subject to conditions in Rule 10(1) (c ) which reads as under: Rule 10 (1)- In determining the transaction value, there shall be added to the price actually paid or payable for the imported goods, - (a).. (b).. (c) Royalties and licence fees related to the imported goods, that the buyer is required to pay, directly or indirectly, as....
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....several other services in connection with the imported goods which led the Hon'ble Apex court to conclude that royalty payment was a condition of the sale of the goods. 5. The Ld. AR reiterated the findings of the Commissioner. He drew our attention to Article 4.1 of the Agreement with M/s. Sandvik Mining and Construction which lays down that Royalty is expressed as a percentage of the invoice price to external customer net of any discount. Hence, according to him, the determination of royalty takes into account the cost of imported raw material and is therefore includible in value for assessment of duty. He placed reliance on the Supreme Court judgement in the case of Matsushita (Supra). 6. We have carefully considered the contention....
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....of sale of imported goods. From the facts it is clear us that the royalty is not related to the imported raw material; the royalty is related to the finished goods. Only because imported goods are contained in the finished goods, it cannot be said that royalty is related to the imported goods. The royalty is only paid for using the Trademark i.e. Sandvik on the products manufactured and sold in India. Therefore, we are of the view that the first condition of Rule 10 (1) (c) is not satisfied because the royalty is not related to the imported goods. 8.1. The Agreements with Sandvik Materials Technology and Sandvik Mining and Construction to whom the royalty is paid do not require the import of material from them only. The material may b....
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....x Court also distinguished the case of Matsushita (supra) relied upon by Revenue. It was held by the Supreme Court that In the case of Matsushita Television (supra) the pricing arrangement was not produced before the Department. In our view, the consideration Clause in such circumstances is relevance. As stated above, pricing arrangement and TAA are both to be seen by the Department. As stated above, in a given case, if the Consideration Clause indicates that the importer/buyer had adjusted the price of the imported goods in guise of enhanced royalty or if the Department finds that the buyer had misled the Department by such pricing adjustments then the adjudicating authority would be justified in adding the royalty/licence fees payment to ....