TaxTMI 
TaxTMI 
2025 (9) TMI 1099
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....ments and the transactions between the appellant and the overseas related company, the adjudicating authority, though accepted the transaction value under Rule 3 of the Customs Valuation Rules, 2007 as declared by the appellant, observed that the Technical Assistance Fee paid by the appellant to the overseas supplier during the 2013-14 amounting to Rs.2,03,34,000/- as per their Balance Sheet be added to the import value under Rule 10(1)(c) of the Customs Valuation Rules, 2007. Aggrieved by the said order, they filed appeal before the learned Commissioner(Appeals), who in turn, rejected their appeal. Hence, the present appeal. 3. At the outset, the learned advocate for the appellant has submitted that the foreign entities viz. M/s. Seiren Company Limited, Japan and M/s. Seiren Shoji Company Limited, Japan are holding 99.99% and 0.01% of the Indian company, respectively. Thus, the relationship between the appellant and the overseas company are that of holding and subsidiary company. The appellant are engaged in the manufacturing and trading of polyester woven and knitted fabrics for automotive components as upholstery. For setting up of a manufacturing facility in Mysore in the ye....
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....the buyer to the seller as a condition of sale of the imported goods. • it is submitted that the impugned order has not provided any evidence to show that the technical assistance fee paid by the Appellant to the Foreign suppliers in terms of the Agreement is related to or that it is a condition to the sale of either the raw materials or the capital goods imported by the Appellant during the relevant period. • The Appellant had entered into Agreement dated 01.04.2013 with the Foreign Suppliers, whereby it had been agreed that the Foreign suppliers would render technical, marketing, or other required assistance and training to the Appellant which may be required for the Products. The details of the assistance provided is extracted in Annexure-B to the Agreement. The scope of services covered under Annexure-B can be broadly categorised as assistance for setting up of the Company, assistance for production process and assistance for marketing and sales activity. This is further supported by the details in Annexure-C and the CA certificate dated 06.05.2014. • Thus, the technical assistance fees paid by the Appellant was not related to any imported....
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....as not made as a condition of sale of the imported goods. The Appellant were bound to pay the said fees for any assistance requested and received by them, irrespective of any import of goods being made. Further, the import of goods from related suppliers or unrelated buyers is not dependent on payment of Technical Assistance Fees. • The Technical Assistance Fee was in no way relatable to the goods imported from the Foreign suppliers by the Appellant and hence, cannot be said to be a condition for sale. In fact, such assistance as mentioned in the Agreement was in the nature of post-importation activity related to production process. It is a settled position of law that the amount paid for post-importation activities is not to be included in the assessable value. As the technical assistance availed by the Appellant from the Foreign supplier was for post-importation activities, the same will not be leviable to customs duty. Reliance in this regard is placed on the decision of Commissioner of Customs (Port), Kolkata v. Steel Authority of India, 2020-TIOL-88-SC-CUS. Indorama Industries Ltd. v. Commissioner of Customs, 2024 (7) TMI 1045 - CESTAT AHMEDABAD. • Th....
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....ion; (iii) the cost of packing whether for labour or materials; (b) The value, apportioned as appropriate, of the following goods and services where supplied directly or indirectly by the buyer free of charge or at reduced cost for use in connection with the production and sale for export of imported goods, to the extent that such value has not been included in the price actually paid or payable, namely :- (i) materials, components, parts and similar items incorporated in the imported goods; (ii) tools, dies, moulds and similar items used in the production of the imported goods; (iii) materials consumed in the production of the imported goods; (iv) engineering, development, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods; (c) royalties and licence fees related to the imported goods that the buyer is required to pay, directly or indirectly, 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; (d) The value of any part of the pr....
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....t. The consideration and fees to be paid by the appellant to the overseas entity is stipulated at Annexure C of the said Agreement. The authorities below after comparing the prices of the tools imported by the appellant from the overseas entity with their list price concluded that the prices of the imported goods declared in the Bills of Entry and the value in the Global price list do not vary and accordingly accepted the transaction value as declared in the Bills of Entry under Rule 3 of the Customs Valuation Rules, 2007. However, analysing various Clauses of the Agreement dated 01.04.2013, it is held the capital goods(tools) imported for setting up of the plant and knowhow is for the production process, planning, technology and data for product development, quality control technology etc. without which the goods cannot be manufactured and properly used. These are expenses incurred prior to the import; therefore, the same should be added to the value of the imported goods under Rule 10(1)(c) of the Customs Valuation Rules, 2010. Further, it is observed by the adjudicating authority that the related overseas suppliers have supplied the goods to the importer for manufacture of autom....
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....tional value must be relatable to import of goods which a fortiori would mean that the amounts must be payable as a condition of import. A distinction, therefore, clearly exists between an amount payable as a condition of import and an amount payable in respect of the matters governing the manufacturing activities, which may not have anything to do with the import of the capital goods. 32. Article 4 provided for additional assistance in respect of the matters specifically laid down therein. Technical assistance fees have a direct nexus with the post-import activities and not with importation of goods. 33. It is also a matter of some significance that technical assistance and know-how were required to be given not as a condition precedent, but as and when the respondent makes a request therefor and not otherwise. Appendix C of the agreement relates to manufacture of local parts which evidently has nothing to do with the import of the capital goods. Appendix D again is attributable to construction of plant; production preparation; and pilot production and production model, wherewith the import of capital goods did not have any nexus." 13. The Hon'ble Supreme Cour....
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.... like to emphasis the word indirectly in Rule 9(1)(c). As stated above, the buyer/importer makes payment of the price of the imported goods. He also incurs the cost of technical know-how. Therefore, the Department in every case is not only required to look at TAA, it is also required to look at the pricing arrangement/agreement between the buyer and his foreign collaborator. For example if on examination of the pricing arrangement in juxtaposition with the TAA, the Department finds that the importer/buyer has misled the Department by adjusting the price of the imported item in guise of increased royalty/licence fees then the adjudicating authority would be right in including the cost of royalty/licence fees payment in the price of the imported goods. In such cases the principle of attribution of royalty/licence fees to the price of imported goods would apply. This is because every importer/buyer is obliged to pay not only the price for the imported goods but he also incurs the cost of technical know-how which is paid to the foreign supplier. Therefore, such adjustments would certainly attract Rule 9(l))(c). Application of Rule 9(l)(c) to the facts of the present case ....