Case Law Details
Indian Oil Corporation Ltd Vs Commissioner of Customs (CESTAT Kolkata)
Fees for know-how was not required to be added to assessable Value of Imported Goods in terms of Customs Valuation Rules
Conclusion: Charges of Know How agreement were not required to be added to the assessable value of imported goods in terms of Customs Valuation Rules, 1988 as there was no technical know-how fees attributable towards post import related/associated acts and activities and thereby no case arose for scaling up the assessable value with the inclusion of the royalty charges.
Held: Assessee entered into a contract with USA company for supply of equipment’s for FCC, LPG and FCC Gasoline Treater unit required for establishing a treating unit at Haldia and Barauni, for treating LPG and gasoline at their refineries. It had got the contract registered with the department under Project Import Scheme, whereby the Department forwarded the matter to the Special Valuation Branch to examine the feasibility of the inclusion of design and engineering charges, technical knowhow fee and other charges in the invoice value of the imported goods, under the supply agreement for redetermination of transaction value of the imported goods under Section 14 of the Customs Act 1962, read with Rule 4 and Rule 9 of the Customs Valuation Rules 1988. During the process of enquiry, assessee submitted complete details and responses to the queries and the questionnaire seeking information as called for by the Special Valuation Branch of the Custom House. Assessee had got the approval of the Secretary of Industrial Assistance (SIA) dated 14.07.1999, whereby the government approved the technology collaboration between the importer and USA company which stipulated that company possesses technical information relating to Fiber – Film T.M Technology, Contractor technology and other technology, useful in petroleum, refining and chemical operations (confidential information) and appellant would receive the confidential information from time to time for design engineering, procurement of equipment and construction of LPG/Gasoline Treating Units for use at the Haldia and Barauni refinery of IOCL. The confidentiality agreement was signed well before the signing of the other two agreements, perhaps indicative of the fact that the process licensor wanted to ensure that the technology supplied would be kept secret and confidential at the hands of the importer. It was held that the contract, as entered into by the appellant with their overseas buyers were on identical. There was no obligation to bind the appellants to any post import act/activity and thus render it as a condition of sale for procurement of the imported goods. There was no technical know-how fees attributable towards post import related/associated acts and activities. Thereby no case arose for scaling up the assessable value with the inclusion of the royalty charges. In fact the preamble clause of the Confidentiality Agreement supra clearly brought to fore its purpose, completely unrelatable to any post import functioning.
FULL TEXT OF THE CESTAT KOLKATA ORDER
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