TaxTMI 
TaxTMI 
TaxTMI 
2008 (8) TMI 197
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....tement of import of capital goods, raw material and components/spares right from the first import till date. In their reply to the questionnaire they stated inter alia that no royalty/technical service fee has been paid so far on import of supplier of T-Car of the components. They also submitted T-Car CKD supply agreement and technology licence agreement. The Assistant Commissioner of Customs ordered loading of 25% on the invoice value of the imported goods, under Rule 8 of the Customs Valuation Rules, 1988 and in addition, proportionate loading by including technical assistance fee, in terms of Rule 9(1)(c) of the Customs Valuation Rules, 1988. The adjudication order was upheld by the Commissioner (Appeals); hence this appeal. 2. We have heard both sides. 3. We find that vide order dt. 7-7-2005 the Additional Commissioner of Customs had ordered loading invoice value by 12.5% in respect of components imported by the appellants from the same supplier for the manufacture of another model, J-Car, on the ground that the relationship between the importers and their suppliers had influenced the price. The enhancement was upheld by the Commissioner (Appeals); such order was challenged b....
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....CSO parts are imported as a complete kits. Further, CSO parts are ordered on a pre-agreed advance basis, giving M/s. GMDAT sufficient notice to plan and organize their production and supply schedule. (j) On the other hand, in the event of supply of parts as PRD, such parts are delivered to the aopellants on an immediate basis to facilitate continued and uninterrupted production in India. (k) In other words, when the appellants place order on M/s. GMDAT for supply of parts as PRD, it is treated as spot sales and M/s. GMDAT supply the same immediately without adhering to the usual production/delivery schedule. (k) While the appellants and GMDAT have agreed and arrived that the value of the parts and components to be supplied by GMDAT to the appellants, in respect of PRD parts supplied by GMDAT, GMDAT charges a premium of 12.5%. Kindly refer to clause 4 of the agreement. (i) The reason for charging 12.5% premium on PRD parts is because supply of PRD parts involve additional Costs at GMDAT as they have to - 1. Re-schedule their production which involves set-up time 2. Overtime 3. Special Packaging: Regular CSO/PBP parts ordering has well defined ordering as well as packaging pro....
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.... to be accepted as unchallenged to arrive at a conclusion that 12.5% cannot be added" 4. The above order has attained finality inasmuch as it has been accepted by the department. The supply agreement considered in the above order in respect of J-Car is identical in all respect to the supply agreement in the present case. Further, as per Rule 4(2)(h) of the Customs Valuation Rules, 1988, the transaction value between the related persons is acceptable under Rule 4(3)(a) or 4(3)(c). The Interpretative Notes to Rule 4(3) provide as under :- Rule 4(3) 1. Rule (3)(a) and Rule 4(3)(b) provide different means of establishing the acceptability of a transaction value. 2. Rule (3)(a) provides that where the buyer and the seller are related, the circumstances surrounding the sale shall be examined and the transaction value shall be accepted as the value of imported goods provided that the relationship did not influence the price. It is not intended that there should be an examination of the circumstances in all cases where the buyer and the seller an examination of the circumstances in all cases where the buyer and the seller are related. Such examination will only by required where there ....
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....-license, or (ii) manufacture engines or transmissions for such vehicles, or (iii) distribute production of service parts relating to the vehicles outside the territory. 8. Data has been defined in Article 1(c) of the agreement as product engineering or business information related to the assembly of Vehicles and licensed parts or which is required to conduct ancillary functions, operations and activities, as specified in Appendix D. Article 7 of the agreement sets out the terms of payment. The services rendered by the foreign supplier essentially related to manufacture and assembly of the components in India. Technology was imparted to the appellants by way of training the appellant's personnel and also by way of supply of technical documents and technical drawings relating to manufacture/assembly of Aveo cars in India and does relate to components or capital goods imported from the supplier or from others. There is no condition in the agreement to the effect that capital goods will be sold to the appellant by the foreign supplier only when the licence fees are paid. In other words, the appellants are not under compulsion to import capital goods or components from GMDAT. This is ....
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....ove decision of the Tribunal and the Apex Court, an explanation has been provided to Rule 10(1)(c) of the Customs Valuation Rules, 2007 providing that :- "Where the royalty, licence fee or any other payment for a process, whether patented or otherwise, is includible referred to in clauses (c) and (e) such charges shall be added to the price actually paid or payable for the imported goods, notwithstanding the fact that such goods may be subjected to the said process after importation of such goods". In its Circular No. 37/07, dt. 9-10-2007 the CBEC has clarified in Para 2(iv) that the explanation to Rule 10(1)(c) was added in the context of the Apex Court judgment in the case of CC v. J.K. Corporation Ltd. [2007 (208) E.L.T. 485 (S.C.)] so as to clarify that such royalty, licence fee etc., if otherwise includible in terms of clause (c) or clause (e) of Rule 10, will be includible in the value of the goods irrespective of the fact that such royalty, licence fee etc. relates to a process which is made operational during the running of the machines, i.e, after importation of the goods. This clearly establishes that Rule 9(1)(c) as it stood at the relevant point of time, cannot be inv....