L.M. GLASFIBRE (INDIA) PVT. LTD. Vs. CC

JUDGEMENT

(1.) IN this appeal at the instance of the Importer the issue that has come up for consideration is whether total lump sum fee of 7.5 million DKK for transfer of production know -how related to manufacture of rotor blades of wind mills is to be added to the value of the imported goods under Rule 9(1)(c) of Customs Valuation Rules, 1988. Appellant is a joint venture company formed by three joint ventures, namely, M/s. L.M. Glasfibre A/S (LMG) Denmark, the Industrialization Fund for Developing Countries (IFU) Denmark and NEPC Micon Limited. Initially the shareholding was in the ratio of 45% : 39% : 16%. With effect from 19.6.2002 LMG acquired 100% of the shareholdings of the appellant company with the approval of FIPB Authorities.

(2.) APPELLANT company was formed with the objective of manufacturing blades for wind turbine generators. They entered into three separate agreements with LMG on the following terms: - S. No. Date of Purpose Item Consideration Agreement - - 1. 22.4.1994 Production 2 models of DKK 2.5 million know -how rotor blades viz., LM 12HHT & LM 13.4 2. 15.12.1997 -do - LM 14.4. Rotor DKK 1 million Blade 3. 17.1.2000 -do - LM 15.4 Rotor DKK 4 million Blade Total DKK 7.5 million - -

(3.) THE appellant had imported raw materials (Glass Fibre, Polymers) Components (Tip Brake System) and capital goods (moulds for blades) from LMG. The assessing authority under order dated 23.1.2001 held that the supplier and appellants are related and know -how transfer fee of DKK 7.5 million is addable to transaction value as per Rule 9(1)(c) of the Customs Valuation Rules, 1988. On appeal by the assessee the Commissioner (Appeals) by order dated 14.8.2001 held that the know -how payment has nothing to do with the components imported as it related to manufacture of the final products and, therefore, the fee cannot be loaded in the transaction value under Rule 9(1)(c). Department took up the matter in appeal before the Tribunal and the Tribunal remanded the case to the Commissioner (Appeals) for de novo adjudication. On remand, the Commissioner (Appeals) by order dated 30.5.2003 confirmed the adjudication order. Aggrieved by the above the assessee has come up in appeal.