RAMSONS VEIT (PVT.) LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE appellants had imported motor and electrical items from M/s. Veit Gmbh & Co., Germany and cleared the goods on payment of duty on a provisional basis with 20% loading on the transaction value at the instance of the Special Valuation Branch (SVB). The above goods were imported for use in the manufacture of vacuum ironing tables, the 'contract product' under a Technical Collaboration Agreement between the importer and the German company. Under the same agreement, technical information in the form of documentation was transferred by the German company to the importer for the manufacture of the contract product in India. Technical assistance in the form of training of the importer's personnel was also provided by the German company. In consideration of these benefits, the importer paid a lump sum of DM 50,000 to the German collaborator and also paid to them a royalty @ 3% of the net sale proceeds of the contract product. Under another agreement viz. Trade Mark Licence Agreement, the importer paid to the German company a 'Trade Mark Fee' @ 1% of the invoice value of the contract product sold in India, as consideration for the right to use the German company's brand name/trade mark on the contract product in India. It was without looking into any of these aspects that the SVB ordered loading of the transaction value at 20%. Aggrieved, the importer [hereinafter referred to as 'the assessee'] approached the Commissioner (Appeals) and the latter, after setting aside the SVB order, directed that the assessable value of the imported goods be determined in terms of Rule 7 of the Customs Valuation Rules, 1988. In an earlier round of litigation, the above decision of the appellate Commissioner was set aside by this Bench with a direction for fresh decision. The order presently under challenge in the assessee's appeal has been passed by the Commissioner (Appeals) pursuant to the remand. In the impugned order, learned Commissioner (Appeals) has called for addition of DM 50,000 under Rule 9(1)(c) of the CVR and of trade mark fee under Rule 9(1)(d), to the transaction value of the imported goods. Further, the assessee has been directed to furnish relevant data to SVB to enable them to quantify the duty recoverable from them. The present appeal is against this order of the appellate Commissioner.

(2.) AFTER hearing both sides and considering their submissions, we note that the only issue arising for consideration is whether the lump sum of DM 50,000 paid by the assessee as technical information/assistance fee to their foreign collaborator and the trade mark fee paid by the assessee to the collaborator for the right to use the latter's trade mark on the contract product in India are liable to be added to the transaction value under Rule 9(1)(c) and Rule 9(1)(d) respectively. After a perusal of the Technical Collaboration Agreement, we find that the lump sum of DM 50,000 was paid as consideration for technical information and assistance provided by the German company for the purpose of manufacture of the contract product (Vacuum Ironing Tables). There is nothing in this agreement to indicate that this payment was related to the imported items. On the other hand, a nexus between this payment and the post -importation activity of manufacture of the contract product can be seen in this agreement. We have also not been able to find out anything in this agreement to show that the transfer of technical information or the provision of technical assistance to the assessee was a precondition for the sale of the imported items. In other words, the twin conditions attached to Rule 9(1)(c) were not satisfied in this case. We have considered similar cases, of late, and found that, in those cases, technical know -how/assistance fee paid by the assessees to their foreign collaborators, in the facts and circumstances similar to those obtaining in present case, were not to be added to the transaction value of the goods imported by those assessees vide Final Order Nos. 1394 to 1403/2007 dated 15.11.2007 [HSI Automotive Ltd. and Ors. v. Commissioner of Customs, Chennai ]. We considered a few recent decisions of the apex Court cited by the assessees' counsel and applied the ratio thereof in that batch of appeals. Following the same ratio, we hold, in the present case, that DM 50,000 is not addable to the transaction value under Rule 9(1)(c) of the CVR 1988.

(3.) IN this factual situation, the ratio of our decision in Final Order Nos. 1394 to 1403/2007 dated 15.11.2007 [HSI Automotive Ltd. and Ors. v. Commissioner of Customs, Chennai] would also apply squarely to the question whether trade mark fee paid by the asses see to the German company was to be included in the assessable value of the imported goods.