CA Bimal Jain
Continental Coffee Ltd. (“the Appellant”) imported capital goods under EPCG license from Brazilian Food Projects (“the Supplier”), a related party to the Appellant. The Appellant also entered into an agreement with the Supplier to supply technical knowhow, design and drawings. The Department alleged that the consideration paid for technical knowhow, design and drawings are addable to the value of imported goods in term of Rule 9 of the Customs Valuation Rules. The Appellant advocated that the payment of technical knowhow is not towards imported goods and it is not a condition of sale of imported goods. It was also contended that the technical knowhow fees relates to post importation activity.
The Hon’ble CESTAT, Chennai relied upon the following judgments:
- Saint Gobain Glass India Ltd. Vs. CC Chennai – 2014 (310) ELT 757 (Tri.-Chennai)
- Godrej Agrovet Ltd. Vs. CC Chennai vide Final Order No.41538-41539/2015 dated July 17, 2015 [2015 (11) TMI 1025-CESTAT Chennai] and
- Commissioner Vs. Toyota Kirloskar Motor Pvt. Ltd. – [2007 (213) ELT 4 (SC)]
- CC Mumbai Vs. Hindalco Industries Ltd. [2015 (320) ELT 42 (SC)]
And held that the charges of technical knowhow cannot be included in the value of imported goods in terms of Rule 9 of the Customs Valuation Rules where these expenses aren’t condition to sale of the imported goods. Thus, technical knowhow fee is for design, drawing and technical information provided to Appellant by overseas supplier is purely a post importation activity not related to the imported goods, hence it wouldn’t be includable to the value of imported goods.
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