TaxTMI 
TaxTMI 
2024 (10) TMI 686
X X X X Extracts X X X X
X X X X Extracts X X X X
....e related suppliers. 2. As per the Order-in-Original No. 6/2013 dated 18.07.2013, SVB had issued an order for loading of royalty charge @ 2.5% of the transaction value on the raw-material, royalty @ 2.5% in respect to trading of goods and loading of 1.9% as product development charge on the transaction value by rejecting the invoice value. Aggrieved by the said order, an appeal was filed before the Commissioner (Appeals) and the Commissioner (Appeals) partially modified the order and remanded the issue to original authority. However, original authority vide order dated 06.09.2017 held that such royalty payments are to be included in the assessable value. Aggrieved by said order, an appeal was filed again before the Commissioner (Appeals) a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....manufactured products inclusive of the value of the imported goods/products imported from their related parties as a condition of sale. Therefore, royalty amount to be paid towards imported goods needs to be added to the transaction value as per the provisions of Rule 10 (1)(c) of Customs (Valuation) Rules, 2007. Learned AR also drew our attention to para 7 of the judgment of the Hon'ble Supreme Court in the matter of M/s. Matsushita Television & Audio (I) Ltd. Vs. Commissioner of Customs [2007 (211) E.L.T 200 (SC), which is extracted as under: "7. The question which arises for consideration in this civil appeal is: whether royalty payment was connected with the imported components. Under Rule 9(1)(c) of the Valuation Rules, 1988, only su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vt Ltd vs C.C, New Delhi (2018 (362) E.L.T 875 (Tri. Del), iii. Commr.C.Ex Mumbai vs M/s Herbalife International Pvt Ltd (2016 (341) E.L.T 257 (Tri.Mum) iv. M/s Husco Hydraulics Pvt Ltd vs CC (Import), Mumbai 2016 (341) E.L.T 113 (Tr. Mum) 6. The Learned Counsel for the Respondent submitted that the Royalty is paid to M/s. Auto Liv , Sweden at 2.5% of net sale of finished goods. The Royalty became due only when the finished goods are sold by Respondent. Further there is no condition that the Respondent is bound to import raw material from them and there is no condition while selling the imported goods. Learned Counsel for the Respondent further submitted that onus is on the Department to prove that the Royalty paid by the Respondent is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....owards Royalty and another 1.9% towards product development charges paid by the Respondent. Aggrieved by the said, proceedings an appeal was filed before the Commissioner (Appeals). As per the impugned order, the first Appellate authority rightly held that the Royalty paid by the Respondent is not required to be added to the assessable value of imported goods in terms of Rule 10(1)(c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. 9. Learned counsel for the respondent drew our attention to the contract entered by the appellant and further submitted that the transaction value of the goods imported from the associated companies are at "arm's length price" under Rule 3(3)(a) of the Customs Valuation Rules, 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... judgment of the Hon'ble Supreme Court is not applicable in Appellant's case, since the agreement in the instance case explicitly mentioned that the Royalty being paid by the Respondent is for the license to manufacture the final product and not for imported goods. Further in the said matter, sale of goods was based on the approval given by the supplier of the imported goods in terms of license agreement whereas in present case there is no such condition in the license requiring the Respondent to sell the goods after obtaining approval from the supplier. 11. Further in the matter of M/s Mitsubishi, a factor whether the raw material is to be imported only from the related supplier was not examined whereas in the instant case there is no con....