By TIOL News Service

MUMBAI, JUNE 10, 2016: THIS is a Revenue appeal filed in the year 2005.

The appellant is a 100% EOU and associated company of M/s. Nissel ASB Machine Co. Ltd, Japan. They imported goods which were examined by the SVB/GATT Valuation Cell for determination of assessable value u/s 14 of the Customs Act read with Customs Valuation Rules, 1988. As per the Technical Assistance and Licence Agreement, the importer was to pay the supplier a lumpsum fee of Rs.52.3 million, net of taxes in consideration of the licence and technical assistance provided by them.

The adjudicating authority held that as there is no duty liability on the importer for the imported inputs for their 100% EOU, and loading of technical know how fees will cause no effect on customs duties, the invoice value was accepted under Rule 4 of CVR, 1988.

Revenue was aggrieved with this order and went in appeal.

The Commissioner (Appeals) was not impressed and rejected the appeal.

Revenue did not stop here but wanted to try its luck in the Tribunal, so the appeal.

The AR while reiterating the grounds of appeal submitted that merely because 100% EOU is exempted from payment of custom duty, it cannot be said that wrong valuation should be accepted. It is further emphasized that supplier and importer are related to each other and hence the lump-sum amount paid towards technical assistance was clearly relatable to import of the goods and the same is includible in the value of the goods under Rule 9(1)(c) of Customs Valuation Rules, 1988. Reliance is placed on Essar Gujarat Ltd - 2002-TIOL-44-SC-CUS, Om Prakash Bhatia - 2003-TIOL-06-SC-CUS & Pankaj V. Sheth - 2003-TIOL-76-HC-KOL-CUS.

The Respondent importer submitted that the lump-sum fees paid by the importer to the supplier is not includible in the assessable value as the same is towards knowhow for manufacture of the product in the India as clearly specified in the agreement and the knowhow is not in relation to the imported goods. Furthermore, respondent being 100% EOU, are not required to pay custom duty on the import, therefore, even if the lump-sum fees towards technical assistance is includible there is no impact of Revenue as no custom duty payable on the import by EOU.

The Bench observed -

"6. We find that the respondent is 100% EOU and their import is not chargeable to custom duty, therefore, even if there is any variations in the valuation, there will be no effect of custom duty payment. We, therefore, without going into merit of the issue that whether lump-sum technical assistance fees is includible in the assessable value or otherwise, we find that since no custom duty involved, in the present case due to respondent being 100% EOU, the Revenue's appeal does not survive. We therefore without giving any observation on the issue of valuation, dismiss the appeal of the Revenue only on the point that no custom duty demand is involved…"

The Revenue appeal was dismissed.

(See 2016-TIOL-1392-CESTAT-MUM)