DAEWOO MOTORS INDIA LTD Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THIS appeal is by M/s. Daewoo Motors India Ltd. They are engaged in the manufacture of Ceilo brand cars in India. Earlier, to begin with, the appellant was known as DCM Daewoo Motors Ltd. With effect from 5 -5 -1997 this name was changed as shown in the appeal. Appellant is a joint venture between M/s. Daewoo Corporation of Korea and M/s. DCM Toyota Ltd., New Delhi. Manufacture of passenger cars was taken up with Technical and Financial Collaboration of M/s. Daewoo Motors Korea. Joint Venture Agreement dated 9 -7 -1994 was concluded whereby Daewoo Corporation was to purchase shares to become majority equity holder of 51% paid in capital of DCM Toyota Ltd. On 10 -5 -1994, a Technical Assistance Agreement was entered into between the two whereunder 11.8 million US was payable to Daewoo in consideration of the licences granted to appellant. Over and above this lump sum payment, royalty at 3% was also payable to Daewoo on the Vehicles and Spares for a period of five years. Royalty on wholesale price of spare parts and components either manufactured or assembled by the appellant or purchased from local suppliers at the rate of 3% was also payable to Daewoo Motor Co. Agreement further provided for supply of knocked down parts to the appellant and the price and other terms of such purchases; which was subject to review from time to time on condition that annual price increase shall be less than 10%. Appellants imported various consignments of components from April, 1995. Customs had to decide on the value of the capital goods and components imported pursuant to the above mentioned agreements. Assistant Commissioner of Customs (SVB) by Order -in -Original No. 20/95, dated 26 -12 -1995 adjudicated the issue in the following terms: -

(2.) IN arriving at the above order, the Assistant Commissioner examined the question of nexus between price of imported goods to payment of lump sum on transfer of know -how as well as on running royalty. On this issue the finding was that there is no nexus between lump sum payment which was for getting licences to use the information and royalty was payable on the value of end -product manufactured in India using the information. Influence on the prices of imported goods on account of relationship between the appellant and foreign collaborator was also examined. It was found that records do not establish any such influence relying on the decision of CEGAT in Maruti Udyog Ltd. v. C.C., Bombay.

(3.) ON 16 -12 -1996, Commissioner of Customs reviewed the order of Assistant Commissioner under Section 129D of the Customs Act, 1962 and directed to file appeal before Commissioner (Appeals). An appeal was accordingly filed on 9 -1 -1997. Appellant herein contested the appeal on merits as also on the ground that review was beyond the record of proceedings. That appeal was disposed of by Order -in -Appeal No. 172/SVB /98, dated 27 -10 -1998. As per this order, the case was remanded for de novo adjudication after carrying out proper investigation keeping in mind all the issues raised in appeal. This order passed by the appellate authority is under challenge.