Kamaz Motors Ltd Vs Principal Commissioner of Customs (CESTAT Chennai)
CESTAT Chennai held that royalty payment not connected with the condition of sale is not includible in the assessable value. Hence, invocation of rule 10(1)(c) of the Customs Valuation Rules, 2007 not justified.
Facts- The appellant had filed Eight Bills of Entry between period September 2011 and February 2014 for the clearance of imported goods i.e. ‘CKD-For MFG of 6520 and 6540 Model Kamaz Trucks’; since the importer and supplier were related parties a case was registered with Special Valuation Branch (SVB) Custom House, Chennai to investigate the influence on the transaction value due to the said relationship.
Accordingly, it appeared that the royalty amount of US$ 450 per CKD kit is liable to be included in the assessable value of all the imports of “CKD kits For manufacture of 6520 & 6540 KAMAZ Trucks” under the Bills of Entry which were provisionally assessed and released at the time of import. Since, the above said Bills of Entry are taken up for final assessment, the Royalty amount is liable to be included in the assessable value of all the imports “CKD kits-For manufacture of 6520 & 6540 KAMAZ Trucks.
Conclusion- In the present case however, from the perusal of the transfer of technology agreement the foreign service provider namely KAMAZ-Russia has, based on the number of CKD kit imported by the company, calculated the quantum of royalty amount payable to them towards the transfer of technical know-how and use of their trademark/brand „KAMAZ‟. Hence, it appears to us that the royalty paid to KAMAZ Russia has no bearing with the import from KAMAZ, PTC. Thus, the royalty is not to be paid for the import of CKD which is also clear from reading of clause 11.2 of the technology license agreement as per which, the royalty payments are to be paid on the products assembled using the CKD kits and not on the imports.
