Whether the adjudicating authority entitled to load royalty/licence fee payment on to the price of the imported goods, viz, the shuttle(s) by taking its peak price?

WEP Peripherals Ltd. Vs Commissioner of Customs, Chennai (Supreme Court of India)– The 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. Therefore, 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.

IN THE SUPREME COURT OF INDIA

Appeal (Civil) No. 2757 of 2006

M/s WEP Peripherals Ltd

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