FAIVELEY TRANSPORT INDIA LIMITED Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE appellant seeks stay of operation of the order impugned in the captioned appeal. After hearing both sides on the stay application, we find that the appeal itself can be disposed without further hearing. After allowing the stay application, we take up the appeal proper for disposal.

(2.) THE appellants M/s. Faiveley Transport India Limited, formerly known as Sab Wabco (I) Ltd. (SWIL) imports 'air dryers and assembly kits' from M/s. Graham White Manufacturing Corporation, LISA (Graham White) under a License Agreement entered into with Graham White. SWIL received technical know -how for manufacture of air dryers, etc., for rail bound vehicles. As per the License Agreement, Graham White was to be compensated by payment of an initial lump -sum payment and periodical payments of royalty. Royalty was mutually agreed at 5% of net ex -factory sale price of the licensed products exclusive of excise duties minus the cost of the standard bought -out components and landed cost of imported components. After scrutiny of the relevant documents, the original authority found that royalty was not addable to the assessable value of goods imported from Graham White in terms of Rule 9 of Customs Valuation Rules, 1988. The decision appears to cover previous imports under provisional assessment. Relying on the judgment of the apex Court in CC, Ahmedabad v. Essar Gujarat Limited , the Commissioner (Appeals) held that royalty paid by SWIL to Graham White is required to be added to the assessable value in terms of Rule 9(1)(c) of the Customs Valuation Rules, 1988. In passing the impugned order, he relied on Exhibit 10 to the license Agreement between SWIL and Graham White which reads as follows:

(3.) ON a careful consideration of the case records and the rival submissions, we find that the impugned order does not disclose the essential facts which led to the finding and the decision therein. The order does not indicate the description of the goods under import and why the royalty amounts paid to Graham White are includible in their value under Rule 9(1)(c) of the Customs Valuation Rules, 1988. The Commissioner (Appeals) found that in terms of the License Agreement the appellants were liable to pay 5% of the sale price of the licensed products excluding duties etc to the suppliers of technical know -how. He relied on the observations of the apex Court in the Essar Gujarat Ltd case (supra) to find that the impugned royalty was addable to the assessable value of the goods imported by the appellants.