2017 (1) TMI 276

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....on Rules, 1988.  The matter was taken up for valuation for the reason that there is relationship  between foreign supplier and the appellant  and there is know how agreement  for manufacture  of final product between foreign supplier and the appellant.  As per agreement, the appellant has undertaken to pay the DM 60000 to the foreign collaborator.  The Dy. Commissioner vide Order-in-Original dated 31/7/2000 accepted the transaction value of the appellant  and finalize the assessment accordingly. Being aggrieved by the  Order-in-Original, Revenue filed appeal before Commissioner(Appeals) wherein he allowed the appeal of the Revenue holding that DM 60000 paid in consideration for technical knowhow ....

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....5.  We find that Ld. Adjudicating authority after  careful considerations of the reply to the questionnaire and knowhow agreement came to very reasonable conclusion  that value declared by the appellant  is acceptable.  The relevant findings of the Order-in-Original reproduced below:- As regards royalty, it is calculated on net selling price of the product by deducting the cost of standard bought out components  both imported as well as  indigenous, all taxes are forwarding expenses.  So the royalty is being  calculated only on indigenous value addition of the product.  Hence it is  not related to value of imported components.  The royalty is being charged  for having given....

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.... technical knowhow, the imported goods would have no value since no manufacturing  activity can take place without the technical knowhow.  Therefore, the DM60000 paid in consideration for transfer of  technical knowhow would be addable to the price of imported goods in terms  of Rule 9(1)(c) of the CVR, 1988 on a pro rata basis.  However, regarding  the payment of  royalty, I do not agree with the appellant since, royalty is to be paid on sales of finished goods which is post importation activity  and therefore  cannot have  any bearing on the price of imported goods. From the above findings, we observed that adjudicating  authority  has discussed about technical knowhow whether....