S.D. TECHNICAL SERVICE Vs. CC

JUDGEMENT

(1.) In this appeal at the instance of the importer the issue that is coming up for consideration is whether the amount of UK Pound 50,000 payable as technical know -how fees by the importer is liable to be included in the assessable value of the goods imported.

(2.) M/s. S.D. Technical Services Pvt. Ltd. was permitted by the Ministry of Industry to have a foreign collaboration with M/s. Westing House Brake and Signal Company Ltd. U.K. (for short, WBS) for the manufacture of Air Brake Distributors and pneumatic Door Closers. Under the agreement between the appellants and WBS an amount of U.K. Pound 50,000 is to be paid by the appellant to WBS in lieu of disclosure of technical know -how. As per agreement the appellants are given the right to manufacture and assemble in India licensed equipment for use in railway locomotives and rolling stock with the technical know -how supplied by the WBS. Agreement also provided for training by WBS to employees of the appellants. Appellants were to manufacture licensed equipment strictly in accordance with the manufacturing information and specifications supplied by WBS and the appellants are to mark the Licensed Equipment with a clear indication that it has been manufactured under licence from WBS. The agreement further provided that the appellant shall give to WBS technical know -how fees of fifty thousand pounds in three installments. In addition to the above, the appellants were to pay 5% in respect of sales in India and 8% in respect of sales outside India.

(3.) Appellants imported under Bill of Entry No. 42993 dated 22.11.82 the first consignment of 200 sets of complete air brake distributors. The goods were assessed to duty after loading the invoice value by 10% pending examination of the collaboration agreement. Subsequently the appellant imported 150 distributors in CKD condition under Bill of Entry No. 4695 dated 31.1.83, 300 sets of casting, spring, rubber, circlips and delrine components under Bill of Entry No. 11441 dated 16.3.83 and 200 sets of casting and other parts under Bill of Entry No. 39184 dated 1.10.83. The Assistant Collector finalised the provisional assessment by loading of the value by 10% and also including in the assessable value technical knowhow fees of UK pounds 50,000. Aggrieved by the above, the importer filed an appeal. Commissioner (Appeals) took the view that loading of 10% was not justified as there was no evidence whatsoever to suggest influence of relationship on the price of imported goods but at the same time he upheld the inclusion of technical -know -how fees to the value of the imported goods. While taking such a view he has observed in his order as follows: -