Custom, Excise & Service Tax Tribunal
Commissioner Of Customs, Chennai vs Bayer Indian Syntans Ltd on 25 April, 2008
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.C/210/2003
[Arising out of Order-in-Appeal No.C.Cus.No.160/2003 dated 30.4.2003 passed by the Commissioner of Customs (Appeals), Chennai]
For approval and signature:
Honble Mr. P.G.CHACKO, Member (Judicial)
Honble Mr. P.KARTHIKEYAN, Member (Technical)
1. Whether Press Reporters may be allowed to see 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
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Commissioner of Customs, Chennai
Appellant/s
Versus
Bayer Indian Syntans Ltd.
Respondent/s
Appearance :
Dr.Nitish Birdi, SDR Shri D.Arivind, Advocate For the Appellant/s For the Respondent/s CORAM:
Mr. P.G. Chacko, Member (Judicial) Mr. P. Karthikeyan, Member (Technical) Date of hearing : 25.4.2008 Date of decision : 25.4.2008 Final Order No.____________ Per P.G.CHACKO This appeal of the Revenue is against an order of the Commissioner (Appeals) sustaining an order of the Deputy Commissioner (SVB) which was in favour of the assessee. The assessee (present respondents) had imported leather chemicals from a German-company related to the former in terms of Rule 2 (2) (v) of the Customs Valuation Rules, 1988. Under a Technology Transfer Agreement, they had also obtained technical know-how for the manufacture of products in India, for which the imported chemicals were inputs. Under the said Agreement, the assessee paid royalty as a percentage of their sale proceeds to the supplier of technical know-how. Both the lower authorities held that the royalty was not includible in the assessable value of the imported material under Rule 9 (1) (c). Hence the present appeal of the Revenue.
2. After a perusal of the Agreement, we note that the assessee was liable to pay running royalties @ 5% on net sales of products in India and 8% on sales of products exported from India. It is also found that the landed cost of the imported materials, irrespective of the source of procurement, which were imported for the manufacture of products including charges for ocean freight, insurance and customs duties connected thereto was expressly excluded from net sales for the purpose of payment of running royalties to the supplier of technical know-how. After correctly noting these provisions of the Agreement, the lower authorities rightly held that the payment of royalty had no relation to the imported goods and was not a condition for the import so as to attract Rule 9 (1) (c). We have had also occasion to consider an identical issue in HSI Automotive Ltd. Vs CC Chennai, 2008 (224) ELT 439 (Tri-Chennai), wherein a royalty paid as fixed percentage of net sale proceeds of the licensed product, to the supplier of technical know-how, was held to be not addable to the invoice value of the imported goods under Rule 9 (1) (c).
3. In the result, the Revenues appeal gets dismissed.
(Operative part of the order was
pronounced in open court on 25.4.2008)
(P.KARTHIKEYAN) (P.G.CHACKO)
MEMBER (T) MEMBER (J)
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