2017 (12) TMI 1388

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....s of these imported goods viz. parts used in the manufacture of car infotainment systems like semi-conductor components, etc, are related to the appellants. The foreign suppliers are subsidiaries of same parent entity and are related to the appellant in terms of Rule 2(2) of Customs Valuation Rules, 2007. The appellants entered into a license agreement with M/s Fujitsu Ten Limited, Japan on 30.05.2013. The said agreement allowed the appellant the right to use IPR and know how, for the manufacture of car infotainment system. The valuation of imported goods were examined by the Special Valuation Branch, New Customs House, New Delhi in terms of Circular dated 23.02.2001 of the Board. On completion of verification of various documents, the Orig....

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....ondition of sale of the imported goods. The software imported includes the application/operating software for the final product. They are not disputing the coverage of the valuation with reference to firmware/embedded ware already part of the imported goods. The ld. Counsel submitted a chart to reiterate that there were various software relating to functionality and display in the final product, which has no direct relation to the imported items. The payment of software fee to Japan Co. as "third party" does not satisfy the obligation of the exporters. The ld. Counsel prayed for setting aside the impugned order. 6. Ld.AR supported the findings of the lower authorities. He submitted that the Original Authority examined in detail the scope....

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....he appellants are liable to pay royalty on gross sale value of the manufactured goods. Admittedly, such value includes cost of goods imported by the appellant. The lower authorities held that there is no provision for exclusion of cost of imported goods in such situation. Reliance was placed on the decision of the Hon'ble Supreme Court in Matsushita Television & Audio Co. - 2007 (211) ELT 200 (SC). When the cost of imported items were included in the net ex factory sale price of the manufactured goods and the importer pays royalty as a percentage of turnover of final product, which included the cost of imported components, it becomes a condition of sale of finished goods. Hence, both the conditions of Rule 9(1)(c ) of the Valuation Rules ar....