TaxTMI 
TaxTMI 
2018 (10) TMI 1482
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.... as goods. He further argued that the said amount is not includible as the condition prescribed under Rule, 10(1)(c) of the Customs Valuation Rules, 2007 are not fulfilled. He argued that the said Rule requires Revenue to establish that the said amount has been paid as a condition for sale of the goods being valued. He argued that Revenue has not shown any provision in the contracts where the said royalty has been paid as a condition for sale. He argued that the royalty has been paid in respect of post importation activities i.e. manufacture of viscose filament yarn in India and installation of plant etc. He argued that the payment of such royalty being a principle condition for sale then the supplier of goods would have asked for deposit of the said amount before them. He argued that the facts of the case are different from those in the case of Essar Gujarat Ltd. 1996 56 ELT 221. He argued that in this case the technology is not incorporated in the capital goods. He argued that they are receiving only technical documents which are goods and they should be assessed as goods as has been held by the Hon'ble Apex Court in the case of Associated Cement Companies Ltd., 2001 (128) ELT 21....
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.... as licensor and licensee. Had it been a simple sale of 'know how' or document/ goods as argued by the appellant then the two parties of the agreement would have been described as buyer and seller. The description licensor and licensee itself means that the agreement is not merely a sale of goods but it is essentially a grant of license. Preamble Whereas, Licensee intends to engage in the manufacturing of viscose filament yarn for textile end uses using (discontinuous) Spool Technology ("VFY") at its side in Veraval, Gujarat, India; Whereas, Licensor possesses the know-how with respect of VFY production as further described below; Whereas, Licensee desires to enter into this Agreement and, subject to its terms and conditions, to manufacture, market, distribute, sell, and provide after sales service for, certain VFY in India as agreed upon in this Agreement by using the Know-How and technology licensed by Licensor hereunder together with other know-how related to all details of the chemical plant for viscose spin dope making (including spin bath production and regeneration) and a spinning plant with infrastructure for certain textile aftertreatment; Whereas, Licensee ....
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....r the manufacturing of endless viscose filament yarns in a way that the total yarn traject between the spinning nozzle and the roller, which takes up the yarn, is controlled and operated under defined stretching conditions." From the above it is apparent that Spool Technology is the proprietary knowhow for the manufacture of viscose filament yarn. The technical know-how agreement is specifically for license to use the same Spool Technology which International Chemical Investors have licensed to the appellant. From the above it is apparent that the Spool Technology is a proprietary technology of M/s ICI and the equipment user would need a license to use the said spool technology for using the equipment with Spool Technology. Article 2 of the know-how license agreement reads as follows "The scope of this Agreement shall include: 2.1 The provision by Licensor to Licensee of the Technical Documentation as detailed herein and 2.2 The perpetual, irrevocable non-transferable license to use Licensor's Know-How on a sole and exclusive basis within the Territory as detailed herein, Licensor shall continue to be free to use the Know-How or to grant Third Parties the right to use K....
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....only for use the technology for these goods and only at this site 7. Article 9 of the agreement also envisage following. 9.6 Licensor shall ensure that all existing agreements on the distribution of VFY within the Territory will be terminated, such termination to be effected at the latest by September30, 2012. 9.7 Licensor undertakes as from the date on which the following conditions are satisfied for the first time. (a) termination of the existing distribution agreements in accordance with their respective termination provisions pursuant to Article 9.6; (b) full payment of the Royalty (including interest accrued); and (c) full payment of Royalty instalment 1 as defined in, and in accordance with, the Trademark License Agreement (including interest accrued), And until the expiration or termination of this Agreement not to, directly or indirectly (including through direct or indirect subsidiaries (abhangige unternehmen - as defined in Section 17 German Stock Corporation Act (AklG), "Subsidiaries"), actively market or distribute (aktiver Verkauf order Vertrieb) in the Territory any VFY, unless agreed otherwise with Licensee. Licensor undertakes to agree with each....