TaxTMI 
TaxTMI 
TaxTMI 
2017 (4) TMI 423
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....l Excise Tariff Act, 1985. During scrutiny of records of the Appellant it was found that in terms of licensing agreement dated 03.07.2000 between M/s Euro Apex BV and M/s Bharat Apex Industries ltd. M/s Bharat Apex Industries had paid an amount of US$ 54719 equivalent to Rs. 25,84,817/- in consideration of the technical assistance and know-how for manufacture of heat exchangers. M/s Bharat Apex Industries also paid a royalty of Rs. 11,31,638/- to M/s Euro Apex BV, their foreign collaborator, in terms of licensing agreement dated 03.07.2000 between M/s Euro Apex BV and M/s Bharat Apex Industries. M/s Bharat Apex Industries with the help of technical know-how of foreign collaborator gets the orders from the customers. Customers as per their s....
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....ty has been paid by the customers i.e. M/s Bharat Apex Industries to their foreign collaborators as share of profit in return for using their goodwill in marketing their products. This payment has no bearing on the product manufactured by them for M/s Bharat Apex. This cannot therefore be treated as extra consideration for the manufacture of final product sold to M/s Bharat Apex Industries. 5. The Ld. AR submitted that the cost of design and drawings form additional consideration in relation to the manufacture of the goods. He added that the issue was no longer res integra and had been settled by the Hon'ble Supreme Court in the case of Commissioner Central Excise, Belgaum Vs. Mysore Kirloskar Ltd 2008 (226) ELT 161 (SC). As for the royalt....
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....ember that each clearance is an assessment based on a separate contract and a contract price would normally be the value assessable goods. The order passed by the Commissioner does not indicate that no machines were subsequently manufactured by the respondent after using drawings, designs, jigs, fixtures, tooling etc. supplied by the ITC. Therefore, loading of the entire amount of Rs. 43 lakhs without such a finding and recovery of duty thereon was not permissible at all." 8. In the licensing agreement dt. 03.07.2000 between the appellants (as licensee) and M/s Euro Apex B.V. (as licensor), we find that the following clauses establish the nexus between the technical know-how including design and drawings and negotiated price of product: ....
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....ee agrees to make payment of Euro equivalent to USD 54,719 subject to taxes to the Licensor in the following manner." In fact, the agreement is not merely for design and drawings but a complete contract for technical know-how, royalty, training, sales assistance, supplies and even accounting audit of M/s Bharat Apex Industries Ltd. by public accountant selected by the licensor. Sh. A.P. Malhotra, CGM (Finance) of M/s Bharat Apex Industries Ltd. and also Manager (Finance & Accounts) in M/s Bachmaan Industries ltd. in his statement Dt. 21.03.2005, had, inter alia, admitted that with the help of technical know-how fee of Rs. 25,84,817/- paid to M/s Euro Apex B.V. Holland, M/s Bharat Apex Industries ltd was in a position to get orders from cus....
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....t was collected by the assessee M/s Pepsi Food Ltd. from buyers (stock bottlers) for the use of trademark Lehar on soft drink beverages manufactured out of concentrate sold by the assessee. Realization of royalty was as important as the realization of the sale price of concentrate from the assessee s point of view. Bottlers were obliged to purchase the concentrate from assessee alone, use the trademark of assessee on bottled beverage in addition to trademark of Pepsico and comply with the instructions of assessee in regard to manufacture, sale and distribution of beverages. There thus existed an inextricable bond between the obligation of bottler to purchase concentrate exclusively from assessee and user of trademark of assessee subject to ....
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.... an exclusive but non-transferable license and same is being paid by M/s Bharat Apex Industries Ltd. in connection with the marketing and sale of the product as per Para 10.2 of the agreement. There is no evidence that the burden of royalty is to be borne by the appellants. Same is therefore not includible in the assessable value of the goods. The facts of the Pepsi case are entirely different as there was integral link between the obligation of the bottlers to purchase the concentrate exclusively from the assessee and use of trademark of assessee subject to payment of royalty. 12. The case law of McDowell and Co. Ltd. (supra) is not applicable as the same relates to an application for stay of pre-deposit. In the case of MGM entertainment ....