TOYOTA KIRLOSKAR MOTOR PVT. LTD. Vs. CC

JUDGEMENT

(1.) BOTH Revenue and assessee are in appeal against the same order (Order -in -Appeal No. C3/162/0/2003 -Sea dated 31.10.2003) passed by the Commissioner of Customs (Appeals), Chennai. Accordingly, both appeals were heard together and are disposed under this common order.

(2.) THE appellant manufactures Toyota brand automobiles in India under a collaboration agreement with Toyota Motor Corporation, Japan. The said Toyota Motor Corporation is also the major shareholder in the appellant company.

(3.) THE present dispute arose in regard to valuation of capital goods and parts imported by the appellant from M/s Toyota Motor Corporation, Japan for the manufacture of automobiles in India. Under the impugned order Commissioner has held that royalty for "ordinary assistance" and lump -sum payment for "additional assistance" paid by the appellant to M/s Toyota Motor Corporation should form part of the assessable value of the imported goods. Even though the orders noted that the appellant importer and the foreign supplier are related parties, the order itself has not been passed taking into account the effect of relationship; but in terms of Rule 9(1)(c) of the Customs Valuation Rules 1988. This rule relates to addition of "royalties and licence fees" to the price paid for the imported goods for the purpose of determining the transaction value! because customs duty is to be assessed on the transaction value. We may read the subject Rule for ease of discussion :