COMMISSIONER OF CUSTOMS, CHENNAI Vs. IBEX GALLEGHER LTD.

JUDGEMENT

(1.) IN all these appeals the issue to be decided is whether the Royalties/Technical Fee/Technical Know -how fee/Licence fee paid by the appellants to their foreign suppliers in terms of the agreements entered with them is includible in the assessable value under Rule 9 (1)(c) of the Customs Valuation Rules, 1988. As the decision depends on the specific agreements, we are deciding each case separately.

(2.) REVENUE has appealed against order -in -appeal dated 11 -7 -2001 passed by Commissioner of Customs (Appeals), Chennai. The respondent entered into an agreement with M/s. Gallegher for licensing and technical assistance for manufacture of Electric fencing systems and accessories. There is also an agreement for distribution of the products. Royalty is payable by the respondent in terms of Para 7.5 of the licensing and the technical assistance agreement. The Commissioner (Appeals) has in his findings succinctly held as follows : Royalty of 5% is payable as per clause 7.5 of the Licensing and Technical Assistance Agreement. The Royalties are to cover both electric fencing Technical Know -how and assistance for product manufacture, plus payment for services rendered in India, both technical and marketing and the Royalty is equal to 5% of the selling price to an independent purchaser. As such, it is seen that the Royalty payable has nothing to do with the components, etc., imported nor has it been shown that the Royalty payable is a condition of sale of the imported goods. Therefore, inclusion of Royalty under Rule 9(1)(c) of the Customs Valuation Rules, 1988 is nor maintainable. Accordingly, the appeal is allowed with consequential benefits, if any.

(3.) SMT . Shobha L. Chary, learned JCDR appeared for the Revenue and Shri G. Shivadass, learned Advocate appeared for the Respondents.