HOERBIGER INDIA PVT. LTD. Vs. CC

JUDGEMENT

(1.) This is an appeal at the instance of the importer M/s. Hoerbiger India Pvt. Ltd. challenging the order passed by the Commissioner (Appeals) on 9.12.2002. The issue arising for consideration is whether running royalty of 5% liable? to be paid by the appellant to its foreign collaborator is to be added to the invoice value of the goods imported.

(2.) Appellants are manufacturers of compressor valves and parts thereof for air compressor as well as gas compressor. They had entered into financial -cum -technical collaboration agreement dated 26.11.93 with M/s. Hoerbiger Ventilwrke Gmbh, Austria (hereinafter referred to as H.V.W). The appellant which is now 100% subsidiary of H.V.W. Austria entered into a Patent and Know -how license agreement dated 30.1.2001 with Hoerbiger Kompressortechnik Service Gmbh, Austria for the purpose of manufacture of valves, control systems, packing and sealing elements as indicated in Recital (1) of the said agreement with the approval of Reserve Bank of India. In terms of this agreement there was no payment of technical know -how or lump sum royalty. The only payment to be made by the appellant to the foreign collaborator was royalty at the rate of 5% to 8% of the net selling price of the product manufactured and sold in India to other companies of Hoerbiger group. Deputy Commissioner of Customs, GAIT Valuation Cell, Mumbai took the view that the above running royalty was nor related to the imported product and that it is not a condition of sale of the supplied goods. The above finding was challenged by the Department and Commissioner (Appeals) reversed the order referring to the ratio of the decision of the Supreme Court in Essar Gujarat, 1996 (88) ELT 609 (SC). Aggrieved by the above the importer has filed the present appeal.

(3.) The appellant would contend that the terms of the agreement between the appellant and the foreign collaborator would not satisfy the requirement for application of Rule 9(1)(c), namely, (a) royalty and licence fee are related to the imported goods and (b) payment to be a condition of sale of goods being valued.