COMMISSIONER OF CUSTOMS Vs. BASF STRENICS PVT. LTD.

JUDGEMENT

(1.) These three appeals have been filed by Revenue and the cross objection has been filed by the respondent. M/s. BASF Styrenics Pvt. Ltd., the respondents import Ethyl Benzene from M/s. BASF, Germany. On a reference from Jawahar Custom House, the Deputy Commissioner, GATT Valuation Cell in Mumbai Custom House has passed the order -in -original holding that the respondents and the suppliers are related to each other and he has ordered for loading the value of Ethyl Benzene by 1%.

(2.) The respondents have also imported Styrene Monomer from M/s. BASF, Singapore. On a reference from Deputy Commissioner of Customs, Surat, the Deputy Commissioner, GATT Valuation Cell has passed a similar order loading the value by 1% as in the case of Ethyl Benzene.

(3.) The Commissioner (Appeals) has reversed the order of the original authority with the following finding: - The appellants are having a license know how agreement with Licensor of Germany for production of different BASF grades of polystyrene. The appellants are getting raw materials i.e. Styrene Monomer from related supplier at Singapore and one Sabic Marketing. As per the finding of the lower authority, the prices in both the cases are comparable. So, it is obvious, that price charged by related supplier is not effected because of the relationship. The appellants are at liberty to buy the raw material from any of them. As per the agreement with licensor of Germany, the appellants intends to make modification of existing plant, including incorporation of an additional pre -polymerization reactor, which will enable them produce all polystyrene grade BASF is actually producing. "Agreement products" has been defined to mean any polystyrene polymers manufactured in whole or in part according to existing technology or improvements. It is not case that there has been import of any capital goods, or raw materials imported are proprietary in nature. In consideration of license/know -how, the appellants are required to pay Licensor royalty of varied percentages in different year. I find the license agreements and supplies of raw materials from related supplier at Singapore or Sabic Marketing or the Licensor are not related or conditions of sale. As per the agreements royalty of varied percentages shall be paid for all Agreement products sold or used captivity by appellants. Agreement products used by appellant shall bear royalties on an assumed net sales value. From provisions of agreement it is seen that the royalty payment is not related to manufacture of imported raw materials, but concerned with technology for production of finished goods in India. So royalty paid is not includible in value of raw materials. In the second case relating to import of Ethyl Benzene, the appellants have demonstrated that their invoice price is higher compared to ruling prices per "ICIS Price Report", which has not been disputed by adjudicating authority. In fact price has been ordered to be accepted under Rule 4(3). Regarding payment of royalty, for the reasons given in earlier paras in view of provisions of the agreement, the same is not includible in the invoice price.