2007 (11) TMI 176

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....al Collaboration Agreement between the importer and the German company. Under the same agreements technical information in the form of documentation was transferred by the German company to the importer for the manufacture of the contract product in India. Technical assistance in the form of training of the importer's personnel was also provided by the German company. In consideration of these benefits, the importer paid a lump sum of DM 50,000 to the German collaborator and also paid to them a royalty @ 3% of the net sale proceeds of the contract product. Under another agreement viz. Trade Mark Licence Agreement the importer paid to the German company a 'Trade Mark Fee' @ 1% of the invoice value of the contract product sold in India, as co....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....llaborator for the right to use the latter's trade mark on the contract product in India are liable to be added to the transaction value under Rule 9(1)(c) and Rule 9(1)(d) respectively. After a perusal of the Technical Collaboration Agreements we find that the lump sum of DM 50,000 was paid as consideration for technical information and assistance provided by the German company for the purpose of manufacture of the contract product (Vacuum Ironing Tables). There is nothing in this agreement to indicate that this payment was related to the imported items. On the other hand, a nexus between this payment and the post-importation activity of manufacture of the contract product can be seen in this agreement. We have also not been able to find o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... be added to the price actually paid or payable for the imported goods in determining the customs value." It would appear from the above Note that the payments in respect of trade marks are also covered by the payments referred to under Rule 9(1)(c). In other words, trade mark fee has to be treated as analogous to royalty. After examining the relevant clause of the Trade Mark Agreements we find that the payment of trade mark fee @ 1% of the invoice value of the contract product sold in India has a semblance to payment of royalty as a percentage of such value. As a matter of fact, in the instant case itself, there was payment of royalty by the assessee to the German company @ 3% of the net sale proceeds of the contract product in India. B....