Barbour Vardhman Thread Ltd. vs Commissioner Of Customs on 19 July, 2006
6. Rule 9 of the Customs Valuation Rules provides that for the purpose of determining the transaction value, cost of royalties and license fee relating to the imported goods that the buyer is required to pay directly or indirectly as a condition of the sale is to be included in the price of the imported goods. The learned Advocate has drawn our attention to Technical Collaboration Agreement between M/s. Barbour Campbell Ltd. and the appellants, according to which technical know-how shall mean and made all inventions, processes, formulations, patents, engineering and manufacturing skills and other technical information relating to the licensed product. The licensed product means only sewing threads, twines and braids, thus, the price paid by them for technical know-how relates to the manufacture of licensed products, namely, sewing threads, twins and braids. There is no material adduced by the Revenue to show that the payment made towards technical know-how was a condition pre-requisite for supply of capital goods by the foreign supplier. Under Rule 9(1)(c) of the Customs Valuation Rules, the cost of technical know-how is includible if the same is to be paid directly or indirectly as a condition of the sale of the goods. The Revenue has not adduced any evidence in this regard. The Appellate Tribunal has also held in the case of Daewoo Motors India Ltd. v. C.C. , relied upon by the learned Advocate that the payment for the licensed information and patent was nothing to do with the working of the plant and, therefore, lumpsum payment made by the appellants had no connection, whatsoever, in the working of the capital goods imported in absence of any material/evidence, we hold that the amount paid for technical know-how is not to be included in the price of the imported goods. We, therefore, set aside the impugned order and allow the appeal.