Custom, Excise & Service Tax Tribunal
Abb Ltd vs The Principal Commissioner Customs ... on 2 June, 2023
C/01097/2010
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
1st Floor, WTC Building, FKCCI Complex, K. G. Road,
BANGLORE-560009
COURT - I
Appeal(s) Involved:
Customs Appeal No.01097 of 2010
[Arising out of the Order in Appeal No. 29/2009 dated 01/03/2010
passed by the Commissioner of Customs, Bangalore.]
M/s. ABB Ltd ....Applicants
Khanija Bhavan
2nd Floor, East Wing,
49, Race Course Road
Bangalore - 560 001.
Vs.
The Commissioner of Customs (Appeals) ....Respondents
16/1, SP Complex, 5th Floor,
Lal Bagh Road,
Bangalore - 560 027.
Appearance:
....For Appellants
Mrs. Neetu James, Advocate
.... For Respondents
Mr. K.A. Jathin, Dy. Com. (AR)
CORAM:
Hon'ble DR. D. M. MISRA, MEMBER (JUDICIAL)
Hon'ble MRS. R. BHAGYA DEVI, MEMBER (TECHNICAL)
Date of Hearing : 02.06.2023
Date of Decision : 02.06.2023
FINAL ORDER No._20551_ /2023
Per R. BHAGYA DEVI:
This appeal is filed by the appellant against the impugned
Order-in-Appeal No.29/2010 dated 22.02.2010 passed by the
Commissioner of Customs (Appeals), Bangalore.
Page 1 of 7
C/01097/2010
2. Briefly the facts of the case are that the appellants are
importers of various automation technology equipment, frequency
converters, High and Low voltage products, etc., from related and
non-related parties located throughout the world and have filed
100 Nos. of Bills of Entry. The dispute is confined to the valuation
of goods imported from few related parties of the appellant
wherein the Special Valuation Branch (SVB), Mumbai vide order
dated 19.6.2008 after verification of 24 agreements entered into
by the appellant with their different entities, ordered loading of
the amounts paid as royalty in terms of 10 agreements. For 14
agreements, the transaction value was accepted by the SVB.
Based on this SVB order dated 19.06.2008, the Original Authority
had loaded the assessable value with the amounts paid as royalty
in respect of imports made under the above agreements. The
appellants filed an appeal against the assessment orders of
loading by the Original Authority. The Commissioner (A) vide
order No.29/2010 dated 22.10.2010 held that the SVB Mumbai's
order dated 19.06.2008 had ordered to load the specified
percentage of the declared invoice value for the purpose of
arriving at the assessable value for the imports made from
10.10.2007 onwards in respect of the imports made as per the
agreements mentioned in the SVB order. Since the Original
authority had loaded the value based on the SVB order, there was
no infirmity in the action of the assessing officer which called for
any interference. Accordingly, the Commissioner (A) held that the
assessment order passed by the Assessing Officer in the Bills of
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C/01097/2010
Entry was in order and rejected the appeals of the appellant.
Hence, this appeal.
4. Mrs. Neetu James, Learned counsel for the appellant
submitted that issue, in appellant's own case for the Bills of Entry
filed at Mumbai Customs based on the same set of agreements,
has now been settled in their favour by the Tribunal's Final Order
No. A/672/2012-WZB dated 30.10.2012 as reported at 2013
(288) E.L.T.996 (Tri.-Mumbai) wherein it was held that the
amount paid towards royalty should not be loaded in the
transaction value in as much as payment of royalty is not a
condition for sale in the instant case.
4.1 Learned counsel submits that the SVB Mumbai's order dated
19.6.2008 was appealed against to the Commissioner (A), Mumbai
by the appellants and Commissioner (A) vide order dated
2.1.2009 remanded the matter to the Original Authority to
consider all their submissions and pass a fresh order. Aggrieved
by this order, Department filed an appeal before the Tribunal
wherein the Tribunal vide Final Order dated 21.07.2009 ordered
the Commissioner (A) to pass a fresh order on merits. Based on
the above order, the Commissioner (A), Mumbai vide order dated
25.03.2011 upheld the assessment order. Aggrieved by this order
dated 25.3.2011 of Commissioner (A), Mumbai, the appellant filed
an appeal before Mumbai Bench of this Tribunal and the Tribunal
vide Final Order dated 30.12.2012 allowed the appeal of the
appellant.
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C/01097/2010
5. Learned Authorised Representative for the Revenue
reiterated the findings of the lower authorities
6. Heard both sides and perused the records.
7. The issue to be decided in the present appeal is as to
whether the loading of the amounts of royalty paid to their
different entities in terms of 10 agreements in the Bills of Entry,
as per the SVB Mumbai order dated 19.6.2008 is in order.
7.1 We find that the impugned order which is before us in
appeal relied upon SVB's order dated 19.6.2008 issued by the
Mumbai Commissionerate for loading the value in the specified
Bills of Entry. The Commissioner in his order clearly states since
the SVB Mumbai order dated 19.6.2008 has not been appealed
against or set aside the implementation of that order by the
original authority, needs no interference. However, as seen from
the submissions made from the appellant, the SVB order dated
19.6.2008 has been set aside and the present issue has now been
settled in their favour by the Tribunal's Final Order dated
3010.2012 cited supra.
7.2 For the purpose of clarity, the table below is formulated to
explain the sequence of the orders passed for the Bills of Entry
filed against imports made at Mumbai Customs:
Page 4 of 7
C/01097/2010
Sl. Order No. Date Passed by Remarks
No.
1 Order-in-Review 19.6.2008 Commissioner of Ordered to load
No.95/AC/SVB/B Customs the specified
R/2008-09 (Imports), GATT percentage of
Valuation Cell, the declared
Mumbai invoice value for
the purpose of
arriving the
assessable
value for the
imports
2 Order-in-Appeal 2.1.2009 Commissioner of Remanded the
No.18/2009 Customs appeal Original
(Appeals), New Authority to
Customs House, pass a fresh
Mumbai. speaking order.
3 Tribunal Final 21.7.2009 CESTAT, Remanded the
Order Mumbai issue to
No.A/180/09/CST Commissioner
B/C.II & (A), Mumbai to
282/09/CSTB/C.II pass fresh an
(Appeal Filed by order by setting
Department) aside the
remand order of
the
Commissioner
(A).
4 Order-in-Appeal 25.3.2011 Commissioner of Upheld the SBV
(Denovo) Customs order dated
No.112/MCH/AC/ (Appeals), New 19.6.2008 at
SVB/2011 Customs House, Sl.No.1
Mumbai.
5 Tribunal Final 30.10.2012 CESTAT, Decided the
Order Mumbai issue in favour
No.A/673/2012- of the appellant
WZB wherein it had
(Appeal filed by held that
the appellant) royalty cannot
2013 be loaded in the
transaction
value as no
nexus has been
established by
the Revenue.
7.3 In the Tribunal's Final Order No. A/673/2012-WZB dated
301.2012, the Bench has held in paragraphs 6, 6.1 and 7 as under:
"6. We have carefully considered the rival submissions. We
have also perused the licence agreement entered into by
the appellant with the foreign collaborator. From the
agreement, it is seen that the foreign collaborator
(Licensor) grants the Licensee (the appellant) a non-
exclusive, non-permissible license technology to
manufacture/have manufactured and to sell or otherwise
Page 5 of 7
C/01097/2010
to supply the licenced products. The licenced products
have been defined as products and any other articles
manufactured making use of any of the licence technology
identified in the agreements. In consideration thereof the
appellant has to pay the royalty to the Licensor as the
percentage of the net sale price of the licence products in
the Indian market. Nowhere in the agreement is there any
condition that the appellant is required to import any
components from the licensor. In fact, in 7 of the
agreements, we find that there is no condition at all with
respect to import/purchase of any components from the
foreign collaborator. The appellant is free to import the
components either from the collaborator or from anybody
else. If that be so, the condition that the payment of
royalty is relatable to the imported goods and is a
condition for sale of goods cannot be sustained in law. The
appellant is liable to pay royalty to the foreign collaborator
even when the appellant imports the components from
anybody else and do not at all import the components
from the foreign collaborator. Thus, there is no nexus
between the royalty payment and the import of
components.
6.1 In respect of only 3 agreements, we find that there is a
clause relating to purchases which has been reproduced
above. As per the said clause, there is no condition that
the appellant should purchase the components from the
collaborator. The said agreement merely says that the
licensee should give preference when purchasing any parts
or components of the Contract Products not manufactured
by the licensee, if the same meets all the specification
required by the licensee and at competitive price and
conditions. In other words, the clause does not specifically
say that licensee should necessarily purchase the
components from the licensor at all. In the absence of
such a clause in these agreements, we do not find any
nexus between the import of components and the payment
of royalty for the technical know-how.
......
......
7. In the case before us, there is no evidence which has been produced before us by the department indicating that the payment of royalty is a condition for the sale of imported components or it is relatable to the imported components. In the absence of such a nexus, we are unable to agree with the contention of the Revenue that the royalty amount is to be added with the transaction value to arrive at the assessable value of the goods in importation."
Page 6 of 7C/01097/2010
8. The present issue in the impugned order deals with the 10 agreements based on which the value has been loaded.
Since the original Mumbai SVB order dated 19.6.2008 itself stands set aside all orders based on that will have to be set aside.
9. By following the above judgment of the Tribunal in appellant's own case, we set aside the impugned order and allow the appeal with consequential relief, if any.
(Operative portion of the order was dictated in open court) (D. M. MISRA) MEMBER (JUDICIAL) (R. BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 7 of 7