Customs, Excise and Gold Tribunal - Delhi
Neg Micon (India) Pvt. Ltd. vs Commissioner Of Customs on 13 May, 2004
Equivalent citations: 2004(170)ELT29(TRI-DEL)
ORDER
K.K. Usha, J. (President)
1. In this appeal at the instance of the importer, challenge is against the order passed by the Commissioner (Appeals) dated 30-4-2003. The issue arising for consideration is whether licence fee of 2,60,000 DKK payable by the appellant on each Wind Turbine Generator (WTG for short) produced in India is liable to be added to the value of components/parts imported from the collaborator in terms of Rule 9(1)(c) of the Customs (Valuation) Rules, 1988. There is also an issue as to whether service fee of 6000 DKK payable by the appellant to the collaborator for deploying technical assistance by competent personnel for servicing the WTG under annual maintenance contract is liable to be added to the value of imported parts/components under Rule 9(1)(c). The Deputy Commissioner passed an order dated 12-2-2001 wherein he has held that licence fee and service fee shall be added to the transaction value as per Rule 9(1)(c) of the Customs (Valuation) Rules, 1988. Appeal filed by the assessee was allowed by the Commissioner (Appeals) holding that payment of licence fee and service fee are not, in any way, connected with the goods under import. Against the above order department filed an appeal before the Tribunal. Tribunal vide its order dated 19-4-2002 set aside the orders impugned and remanded the matter for de novo consideration. On remand the Commissioner (Appeals) took the view that the fee of 6000 DKK for technical assistance which was rendered for servicing of WTG as well as the lump sum of 2,60,000 DKK payable towards technical know-how under the agreement are relatable to the imports and would be addable under Rule 9(1)(c).
2. It is contended on behalf of the appellant that neither fee for technical assistance in relation to servicing of WTG nor the lump sum payable towards technical know-how would qualify as amounts to be added in terms of Rule 9(1)(c). In order to be covered by Rule 9(1)(c) the licence fee has to be one related to imported goods and that licence fee is payable as a condition of sale of the goods. In the present case, while the agreement for supply of parts and components was entered into on 1-4-97, technical licence agreement was entered into only on 29-1-2000. Therefore, licence fee payable under the subsequent agreement cannot be treated as a condition for import under an agreement entered into three years back. The licence fee agreement makes it clear that licence fee was a compensation for the R & D cost incurred by foreign collaborator NEG Micon A/S Denmark. NEG Micon A/S Denmark has centralised Research and Development centre and was undertaking activities relating to technological innovation of WTG produced by the appellant in India. The appellant therefore submits that such licence fee payable in respect of every WTG produced by it is, in no way, relatable to the imports of parts/components. The agreement also stipulates foreign company to provide technical assistance for servicing the WTG manufactured by the appellant in India and in respect of which the appellant had entered into an Annual Maintenance Contract with third parties. Fee payable for such service to the foreign company cannot have any connection whatsoever with the import of components and parts for the manufacture of WTG. Learned Counsel for the appellant placed reliance on the following decisions in support of his contention:
Mando Brake Systems India Ltd. v. CC, Chennai - 2004 (163) E.L.T. 333 S.D. Technical Service v. CC, New Delhi - 2003 (155) E.L.T. 274 (Tri.-LB) Panalfa Dongwon India Ltd. v. CC, Mumbai - 2003 (155) E.L.T. 287 (Tri.-LB) Polar Marmo Agglomerates Ltd. v. CC, New Delhi - 2003 (155) E.L.T. 283
3. Learned DR contended that there is no error in the reasoning of the Commissioner (Appeals) in coming to the conclusion that the above two amounts are liable to be added under Rule 9(1)(c).
4. Learned Commissioner takes the view that since the parts/components imported from foreign supplier are used in the manufacture of WTG, technical know-how fee which is relatable basically to the assistance provided by the foreign supplier would be addable to the value of the imports made. The Commissioner observed that even though there is a provision in the agreement that the appellant can procure parts from any source other than foreign supplier also no evidence in the form of invoices, Bills of Entry from other unrelated suppliers had been submitted by the assessee. Commissioner also takes the view that the fee payable in relation to servicing of the WTG produced also the same principle should apply.
5. We find no merit in the view taken by the Commissioner. On going through the provisions of the agreement it would be very clear that technical know-how fee relates to the manufacture of WTG in India. Service fee is also in respect of service of manufactured product, namely, WTG. Apart from the fact that the agreement for supply of parts/components was entered into much earlier to the technical licence fee agreement, we find that the technical licence fee was payable in relation to WTG manufactured in India by the appellant and not in respect of parts/components imported by the appellant. Licence fee is not payable as a condition of sale of the imported goods. Therefore, according to us, both the licence fee would not satisfy the required conditions under Rule 9(1)(c) of the Customs (Valuation) Rules, 1988 for being added while assessing the value of the imported goods. We had occasion to consider a similar issue in Mando Brake Systems India Ltd. v. CC, Chennai - 2004 (163) E.L.T. 333 where we have upheld a similar contention raised by the assessee.
6. In view of the above we set aside the order impugned and allow the appeal.