Commissioner Of Customs (Import) ... vs M/S. Eagle Poonawala Industry Ltd

(Arising out of Order-in-Appeal No. 487/2004-MCH dt. 13.9.2004 passed by the Commissioner of Customs (Appeals) Mumbai)

For approval and signature: Honble Mr. P.S.Pruthi, Member (Technical)

Honble Mr. Ramesh Nair, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Commissioner of Customs (Import) Mumbai :

Appellant

VS

M/s. Eagle Poonawala Industry Ltd. :

Respondent

Appearance

Shri D.K. Sinha, Assistant Commissioner (A.R.) for Appellant

Shri S.N. Kantawala, Advocate for respondent

CORAM:

Mr. P.S.Pruthi, Member (Technical) Mr. Ramesh Nair, Member (Judicial)

Date of hearing : 07/08/2015 Date of decision : 07/08/2015

ORDER NO.

Per : P.S. Pruthi

This appeal is directed against the order of Commissioner (Appeals) upholding the Order-in-Original, in which the transaction value was accepted.

2. The dispute has arisen from the agreement for the Licensing of Technology and Processes between the appellant and M/s. Eagle Industry Company Ltd., Japan. The agreement provides for one time lump sum payment of US $1,25,000/- for obtaining license of technology, processes, technical know-how, drawings etc. and royalty payment of 2% commencing from the commencement of sale of Eagle products. Under the Agreement only technical know-how is provided for the said payments. The appellant are required to maintain manufacturing standards equivalent to that maintained by Eagle in its own manufacture. Both lower authorities held that the payment of royalty is related to indigenous manufacture of mechanical seals and parts thereof and there is no obligation to procure the mechanical seals from the collaborators who are a related person.

3. Heard both sides and considered the submissions

4. We find that the ground of appeal is very weak. It states that the importer had imported parts from their collaborator to manufacture goods of foreign collaborators brand name. Interestingly, we find that in the present case there is no import of goods on the value of which the amount of royalty is sought to be added. There is no evidence of actual import in the appeal papers. In any case we note that in terms of Rule 10 (1)(c) of the Customs Valuation Rules, royalty may be added to the price of the goods only if the same is a condition of the sale of the imported goods being valued. This is established law as held in various judgments of the Apex Court including the case of Commissioner of Customs, Vs. Ferodo India Pvt. Ltd. 2008 (224) E.L.T. 23 (S.C.) Revenue has not established that the royalty is paid as a condition of the sale of goods being valued.

5. In above view of the matter, the appeal is dismissed.

(Pronounced in court)

(Ramesh Nair) Member (Judicial)

(P.S.Pruthi) Member (Technical)

SM.

3 Appeal No. C/1037/2004