TaxTMI 
TaxTMI 
2016 (8) TMI 138
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....of the importer s selling price of the licensed products defined in the license agreement dated 01/04/2007 under Rule 4 read with Rule 9 (1) (c) of the Customs Valuation Rules, 2007 for the period from 10/10/2007 till expiry of three years from the date of issue of orders. 1.1 Subsequently, M/s.HHPL approached for the periodical review of the said order-in-original dated 30/06/2008 and submitted the necessary documents and affidavit to the effect that there was no change in the invoicing pattern, etc. After examination of the facts, the Assistant Commissioner, GATT Valuation Cell, New Customs House observed as follows: 15. I find that the importer has also submitted letter from the related supplier Husco International Ltd. UK wherein the Husco International Ltd. UK certified that the price charged in the invoices raised by Husco International Ltd. UK on M/s.Husco Hydraulics India Pvt. Ltd. For the supply of the goods are at international prices which are computed on the basis of all costs and representative profit. Hence, I find that the transaction value of the goods is acceptable under Rule 3 (3) (a) of Customs Valuation (Determination of value of import goods) Rules, 2007. ....
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....ition of royalty payment in assessable value of the goods under Rule 10 (1) (c) of the Customs Valuation Rules, 2007. Aggrieved by the said order, the Revenue has filed two appeals before the Tribunal. M/s.HHPL have also filed two cross objections. 2. The grounds of appeal in the Revenue s appeal are that the Commissioner (Appeals) has not stated as to how the decision of Hon'ble Apex Court in the case of Matushita Television & Audio Ltd. Vs. CC 2007 (211) ELT 200 (SC) is not applicable. In the appeal it has been argued that the royalty is paid on the ex-factory sale price of goods and that includes the cost of imported components. It has been argued in the grounds of appeal that since the cost of imported components was included in the ex-factory sale of products it becomes condition of sale of finished goods. Thus in terms of decision of Hon'ble Apex Court in the case of Matushita Television & Audio Ltd.(supra) the royalty should be added to the transactin value. 2.1 The learned AR took us through the decision of the Hon'ble Apex Court in the case of Matushita Television & Audio Ltd. (supra). He asserted that in the said case the Hon'ble Apex Court has observed as follows....
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..... 2009 (235) ELT 364 (T). In the said case also license fee was found not related to the imported goods and therefore, held to be not includable in the assessable value. Thus, this case also does not further the argument of the Revenue. 2.5 The learned AR also tried to distinguish the decisions relied upon by the Commissioner (Appeals) in the case of Ferodo India 2008 (224) ELT 23 (SC). He argued that in the said case, the imported goods were not a licensed product and it is not clear if the running royalty was calculated on the value including the value of imported goods or not. 2.6 The learned AR also relied on the decision of the Tribunal in the case of MTR Foods Ltd. 2010 (252) ELT 580 (Tri-Bang) and on the decision of the Hon'ble High Court of Delhi in the case of AGV Alfab Ltd. 2011 (270) ELT 331 (Del). Relying on these decisions he argued that the principles of res judicata are applicable to the instant case as the HHPL have accepted the earlier order of GATT Valuation Cell dated 30/06/2008 and since nothing has changed in the terms of the agreement or otherwise it is not open to HHPL to seek a change of assessment. 2.7 The learned AR also relied o....
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....nsaction value accepted under Rule 3 (3) (a) of the Customs Valuation Rules, 2007. 3.2 The learned Counsel also argued that the Commissioner (Appeals) has rightly relied on the decision of the Apex Court in the case of Feroda India (supra) and in the case of Essar Steel (supra) to hold that the transaction value of the goods is acceptable under Rule 3 (3) (a) of the Customs Valuation Rules, 2007 and there is no case for addition of royalty value in assessable value. 4. We have gone through the rival submissions. We find that in the order-in-original dated 30/01/2014, the Assistant Commissioner, GATT Valuation Cell has specifically observed as follows: 15. I find that the importer has also submitted letter from the related supplier Husco International Ltd. UK wherein the Husco International Ltd. UK certified that the price charged in the invoices raised by Husco International Ltd. UK on M/s.Husco Hydraulics India Pvt. Ltd. For the supply of the goods are at international prices which are computed on the basis of all costs and representative profit. Hence, I find that the transaction value of the goods is acceptable under Rule 3 (3) (a) of Customs Valuation (Determination of valu....
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....t this stage. 4.2 The purpose of entire exercise is to find the correct assessable value of the goods for the purpose of valuation under Customs Act. The order-in-original finds the transaction value of goods acceptable under Rule 3 (3) (a) of the Customs Valuation Rules, 2007 only implies that the transaction value is not influenced by relationship, if any. Rule 3 of the Customs Valuation Rules, 2007 reads as follows: 3. Determination of the method of valuation. (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10; (2) Value of imported goods under sub-rule (1) shall be accepted : Provided that - (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part o....
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....n MANU/CC/0178/1998. Para 25 thereof has been reproduced in para 3 above. It is clear that in such cases the principle of res judicata does not apply. In both the cases relied by the Revenue the decision was accepted by Revenue and principle of res judicata was applied against Revenue. In this case it is other way round. Since the decision of Tribunal in the case of Hewlett Packard is in identical circumstances. Thus, we hold principle of res judicata does not apply in the instant case. 4.5 Now we examine the various case laws citied by both the sides. Revenue has heavily relied on the decision of the Hon'ble Apex Court in the case of Matushita Television & Audio Ltd. (supra). In the said case the Hon'ble Apex Court has observed as follows: 7. The question which arises for consideration in this civil appeal is : whether royalty payment was connected with the imported components. Under Rule 9(1)(c) of the Valuation Rules, 1988, only such royalty which is relatable to the imported goods and which is a condition of sale of such goods alone could be added to the declared price. However, in the present case, payment of continuing royalty was payable at the rate of 3% of the net ex-fa....
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....CO Hydraulics Private Ltd. Having its registered office at MIDC, Talegaon, Pune, Maharashtra, India (hereinafter called the Licensee )". 1. Licensed Products shall be defined as all control valves, components and accessories manufactured or designed by HUSCO. 2. Patents shall be defined as any and all patents owned by HUSCO covering the Licensed Products in any of the countries of the Territory as hereinafter defined. 3. Trademarks shall be HUSCO 4. Territory shall be worldwide (non-exclusive) except for North America and Europe, unless exempted by HUSCO for special applications. 5. Net Sale shall be defined as the actual or invoice selling price EXWORKS, less any shipping, insurance, packing or excise taxes thereon, but without deduction for components purchased from HUSCO, for bad debts, nor for any alleged incompleteness or failure of the Technical Information. 2. Payments by the Licensee: The licensee agrees and undertakes to pay the following royalty to HUSCO based upon the currency exchange rate in effect on the last day of the covered period. The licensee agrees to pay to HUSCO a quarterly payment for royalty and technical assistance at a rate equal to three perc....