TaxTMI 
TaxTMI 
2018 (6) TMI 654
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....sions it was decided by the Asst. Commissioner, Special Valuation Branch that the relationship did not influence the price and therefore invoice value was acceptable as Customs value. In 2011, the said SVB order relating to imports from the Korean company came up for renewal. During the said proceedings appellants produced copy of License and Technical Assistance Agreement which they had entered with Hyundai Engineering Plastics Co. Ltd., Korea in April 2008. In terms of that agreement, the appellant was to pay an initial amount of US$ 3,25,000 and running royalty of 4% of the net sale price of the product manufactured and sold by the appellant in India which was reduced to 2% in the revised agreement of April 2013. The Asst. Commissioner (SVB) by an order dt. 20.01.2015, inter alia held that Hyundai Engineering Plastics India Private Ltd., Chennai and M/s.Hyundai Engineering Plastic Co., Korea and M/s.Guangdong Hyundai SK Advanced Polymer Co. Ltd., China are related to each other in terms of Rule 2 (2) of the Valuation Rules; that declared invoice price may be accepted as transaction value under Rule 3 (3) (b) ibid; that royalty amount of US$ 3,25,000 shall be added to any one of ....
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....royalty relates only to net sales price of the products manufactured and sold or otherwise disposed of by the appellants in India. v) Ld. Consultant also drew our attention to Article 4.1 of the revised agreement dt. 08.04.2003 to submit that the running royalty of 4% had been reduced to 2% by such revision; however, this aspect was not taken into account by the Commissioner (Appeals) in spite of being pointed out. vi) The License and Technical Assistant Agreement is therefore in no way related or connected with the import of the impugned raw material imported by them. vii) Although both the original adjudicating authority as well as Commissioner (Appeals) have taken a view that appellants are importing materials only from related supplier, it is pointed out that there is no such addition anywhere in the agreement that the goods had to be bought only from M/s.Guangdonge Hyundai SK Advanced Polymer Company Ltd., China. viii) Appellant imports various grades of Polypropylene and their parent company is only one of the suppliers. Appellants are also importing the same goods from supplier who are not related to them. He placed reliance on the ratio of the following case laws : 1) ....
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....mported as wrong, hold that the invoice value of such imports be accepted as the correct transaction value and assessed to duty accordingly and pass such other orders as the learned Commissioner (Appeals) deem fit and proper in the facts and circumstances of the case and render justice. It is also to be noted that the Department did not prefer any appeal at the same time against the order of the original authority accepting the invoice value. In such circumstances, it was not open to the Commissioner (Appeals) to have gone beyond the scope of the appeal and set aside a portion of the order which was not appealed against by the Department. There are specific procedures laid down in Section 128A of the Customs Act, 1962 for agitating such matters which have not been raised in the notice. However, they cannot be done unless the appellant is given notice within the time limit prescribed in Section 128 of the Customs Act, 1962. This has not certainly been done. We therefore find that the order of lower appellate authority to set aside that portion of the original adjudicating authority's order accepting the invoice price cannot sustain and will have to be set aside, which we hereby do.....
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.... the buyer is required to pay, directly or indirectly as a condition of the sale of the goods. Thus there has to be a nexus between the goods imported with the royalties or license fees. As already found the nexus is only with respect to manufacturer of the goods. The payment of royalty and licence fees are not a condition of sale with respect to the goods imported from the parent company. The addition of royalties and license fees cannot be related to the imported goods, ergo, these amounts cannot be then made part of the assessable value of such imported goods. 5.7 We find that case laws relied upon by the consultant fully support their stand. 5.7.1 In Can-Pack (India) Pvt. Ltd. Vs CC (I) Mumbai - 2015 (327) ELT 291 (Tri.-Mumbai), the Tribunal inter alia held as under : "4.2 We further find that in the decisions relied upon by the learned Counsel for the appellant, the issue has been settled against the Revenue and in favour of the appellant. In the Escorts Ltd. case (cited supra) , the appellant, manufacturer of motor vehicles, entered into a technical know-how agreement with the foreign collaborator for the supply of technology. The argument envisaged payment of lump-sum roy....
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....payment cannot be automatically added to the value of the goods imported. The ratio of these decisions would apply to the facts of the present case." 5.7.2 So also, in the case of Rhone Poulenc (I) Ltd. Vs CC Mumbai - 2016 (335) ELT 122 (Tri.- Mumbai), the Tribunal held as under : "6. On perusal of the order-in-original we find that the adjudicating authority has reproduced important clauses of the agreement entered into by the appellant with their parent concern. The agreement is titled as a technical know-how agreement. The entire agreement is in respect of the finished goods to be manufactured by the appellant in their factory from the technical know-how received from parent concern. The said agreement does not talk about or restrict the appellant to purchase or procure raw materials only from the parent concern. The findings of adjudicating authority are correct. The first appellate authority has not brought on record any evidence to indicate that there was restriction imposed on the appellant to procure the raw materials only from the parent concern. In the absence of any such evidence, we are of the considered view that the loading of the value of by the amount of royalty p....