Hsi Automotive Ltd. vs Cc [Alongwith Appeal No. C/174/2003 ... on 15 November, 2007
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).