TaxTMI 
TaxTMI 
2023 (7) TMI 589
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....e payable is not related to the imported goods and also that it is not a condition of sale and need not be included in the invoice value. The Department accepted the order of Tribunal and the issue came to a settlement. A review order No.6124/2007 dated 30.03.2007 was issued accepting the invoice value for assessment purpose. 2. Later, the matter came up for periodical review and vide OIO No. 14240/2010 dated 19.01.2011 the original authority held that the respondent has to include the licence fee in the invoice value. The Commissioner (Appeals) set aside the said order. Aggrieved, the Department is thus before the Tribunal. 3. Ld. A.R Ms. Anandalakshmi Ganeshram appeared and argued for the Department. She submitted that the earlier order was reviewed and OIO No.6124/2007 dt. 30.03.2007 was issued accepting the invoice value. However, the circumstances have changed. From 09.02.2007 onwards the buyer and seller are governed by a Licence agreement which among other things stipulates as under : "Licensor shall from time to time during the terms of this Agreement furnish Licensee with improvements to the technology of V82 on an as need....
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....EAS AWTPL is engaged in the business of, inter alia, assembling and constructing Wind Turbine and TT Power plant and is having its assembling and construction facility located at Kandanchavadi, Chennai. WHEREAS NEG MICON has centralised Research & Development center that undertakes R&D activities on behalf of AWTPL. NEG MICON's technological innovations are transferred to AWTPL from time through global training program and technology transfers. WHEREAS NEC MICON desires to get compensated for the R&D costs incurred through a license fee payment in respect of every Wind Turbine Generator (WTC) produced by AWTPL." 7. Since NEG Micon and the respondent were related parties, the valuation of the goods was investigated by Special Valuation Branch, Chennai (SVB) and Order-in-Original No. 113/2001 dated 12.02.01 was issued. As per this order, the Licence and Service fee paid by the respondent to its related parties was to be added to the transaction value. Against such order, the respondent filed appeal before the Commissioner (Appeals) and vide order dated 17.07.2001, the order of the original authority directing to include the licence and service fee was set asi....
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....ms AS Denmark. Further, the respondent had produced necessary documents and also filed detailed reply to the questionnaire. Based on the documents submitted by them, the matter was taken up for consideration. The present OIO dt. 19.01.2011 was passed. The said order has referred to the change in the name of the companies and also new licence agreements. However, the original authority held that the licencee fee has to be added to the transaction value declared by the respondent. On appeal, the Commissioner (Appeals) has correctly set aside that part of the order of the original authority wherein it was held that the license fee has to be added to the transaction value. It is submitted that department did not file any appeal against the order passed by the original authority and therefore now department cannot challenge the order passed by Commissioner(Appeals) who set aside that part of the OIO which directed to include the licence fee in the transaction value. 10. The department has stressed on the amended rules whereby an Explanation has been added to Rule 10 of CVR 2007. The Explanation to Rule 10 is not applicable to the facts of the case. The said Explanat....
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....tly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable; The following explanation has been added to Rule 10(l)(c). "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 good, notwithstanding the fact that such goods may be subjected to the said process after importation of such goods". From the above it is clear that the royalty and the other charges can be included : (i) In case of imported goods (ii) As condition sale of goods And the explanation only added that such royalty would be includable' in the case even if the imported goods have undergone the said process after importation of such goods. The department could not show that the royalty and other charges were for the imported goods and they were as a condition of sale of such imported goods. Undisputedly the royalty on technical know-how was paid only for the manufacture sub-assembly of Dis Brake....
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....e circumstances, the decision of the LAA not to add the Licence fee in terms of Rule 10 (1) (c) of Valuation Rules, 2007 is upheld. In view of the above discussions, the impugned order is upheld. Departmental appeal fails." 17. The very same issue was considered by the Tribunal in the case of CC Vs Remy Electricals Ltd. Ltd. 2017 (6) TMI 32-CESTAT CHENNAI wherein the Tribunal observed as under :- "7. We are, however, unable to find out any condition precedent in the license agreement which ties the import of the impugned goods to the payment of the technical know-how and license fees. The imports are therefore definitely not conditional to payment by importer of additional technical know-how fees or royalty. There is no inseparable umbilical cord linking the impugned imports and the technical know-how/royalty fees. On the other hand, what we find is that these fees are directly, conspicuously and separately relatable to the manufacture and sale of products under license. It is also not the case of the department that capital goods or machinery for manufacture of the license product are involved in the current import. There is no dispute that the goods imp....