WEP Peripherals Ltd Vs. Commissioner of Customs, Chennai  Insc 239 (21 February 2008)
H. Kapadia & B. Sudershan Reddy
APPEAL NO. 2757 OF 2006 with Civil Appeal Nos. 4519/06 and 3679/05 KAPADIA, J.
Appeal No. 2757/06:
civil appeal is filed by the assessee against order dated 24.1.2006 in appeal No.
C/276/04 delivered by the Customs, Excise and Service Tax Appellate Tribunal
This matter is a sequel to the decision just delivered in the case of
Commissioner of Customs v. M/s Ferodo India Pvt. Ltd. (Civil Appeal No.
8426/02). Appellant is the manufacturer of Printers. The integral part of a
printer is what is called as a shuttle. In the present case, we are concerned
with Technical Assistance Agreement ("TAA"). Appellant imports
shuttles which are used in the manufacture of printers. Unlike M/s Ferodo India
Pvt. Ltd. case (supra) there is no related party transaction in the present
case. In the present case, the parties are at arm's length. The adjudicating
authority has accepted the transaction value.
only question which arises for determination in this civil appeal is whether
the adjudicating authority was entitled to load the royalty/licence fee payment
on to the price of the imported goods, viz, the shuttle(s) by taking its peak
price. In the present case, the importer/buyer used to negotiate with the
foreign supplier on quarterly basis. During the period under consideration, the
importer received an order for bulk supply.
there was lowering of price. This factor was not at all considered by the
adjudicating authority under rule 9(1)(c). In fact, during the enquiry before
the adjudicating authority, the appellant-importer placed correspondence
between it and the foreign supplier which indicated that the appellant had
received a bulk order for printers and, therefore, it had to lower its price
which fact had not at all been considered by the adjudicating authority while
invoking rule 9(1)(c). In the present case, there is nothing to indicate that
royalty payment was a condition pre-requisite to the sale of shuttle. The only
ground on which the adjudicating authority has held against the appellant
herein is that the shuttle is an integral part of the printer. This view has
been accepted also by the Tribunal, erroneously. The Tribunal also failed to
consider that the appellant had received a bulk order for which it gave a price
discount. The correspondence between the foreign seller and the importer was
placed before the adjudicating authority before conclusion of the enquiry.
There was no reason to reject the said correspondence, particularly when it was
placed before the arguments stood concluded. Moreover, in the present case, the
royalty payment was not based on value. The royalty was payable at the rate of
$ 50/70 per piece. In view of the law laid down by us in M/s Ferodo India Pvt.
Ltd. (supra), the appellant succeeds.
the aforestated reasons, and particularly in the light of the law discussed in
the earlier judgment in the case of M/s Ferodo India Pvt. Ltd. (supra), we set
aside the impugned judgment of the Tribunal as erroneous.
Accordingly, Civil Appeal No. 2757/06 filed by the assessee is allowed with no
order as to costs.
Appeal No. 4519/06:
This appeal is filed by the assessee-importer against order dated 26.4.2006 by
the CEGAT in Application for rectification of mistake in Appeal No. C/276/04
(Final Order No. 103/06). Since we have set aside the impugned order of the
Tribunal in Civil Appeal No. 2757/06 as erroneous, the present appeal is also
allowed with no order as to costs.
Appeal No. 3679/05:
This appeal is filed by the assessee, M/s Daikin Airconditioning India Pvt. Ltd., against order dated
21.3.2005 by the CESTAT. In the light of our judgment in the case of CoC v. M/s
Ferodo India Pvt. Ltd. (Civil Appeal No. 8426/02) this appeal is allowed with
no order as to costs.