2018 (4) TMI 360

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....mpanies. Since the foreign suppliers as well as importer (appellant) were related persons in terms of Rule 2(2) of the Customs Valuation Rules, 2007, valuation of such imports were looked into by the Special Valuation Branch (SVB). The original authority i.e. AC (SVB), vide his order dated 21.04.2015 held that the invoice values of imports were to be loaded with the following additional amounts: i) Annual franchisee fee @ 5% of the value of net purchases; ii) 2% for institutional advertising and promotional campaign and iii) 3% on account of advertising expenditure required to be undertaken by the appellant in India as per the terms of the agreement. 2. On first appeal, these findings were confirmed. Being aggr....

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....ade as a condition of sale of the imported goods. Since the appellant will be allowed to import goods from their principal only on payment of franchise fee @ 5% as well as share of advertising fee @ 2%, the invoice values are required to be loaded by these amounts. Even in respect of 3% incurred by the appellant for advertisement in India, he submitted that such amount is required to be added since it is incurred as a condition of sale of goods by the foreign principal to the appellant. 5. We have heard both the sides and perused the record. 6. It is not in dispute that the appellant is related to the foreign suppliers in terms of the provisions of Rule 2 (2) of the Customs Valuation Rules, 2007. Accordingly, the Special Valuation Bra....

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.... the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable." 8. First, we consider the payment of franchisee fee equal to @ 5% of the value of net purchases. It has been claimed that franchisee fee is being paid in the nature of royalty to enable the appellant to legally sell the goods imported from the foreign principals. We note that such franchisee fee is being paid by the appellant as a condition for the sale of goods by the foreign supplier. Such franchisee fee will be includible in the assessable value in terms of Rule 10 (1) (c) of the Customs Valuation Rules. Hence, we find no infirmity in the findings of....