Full Judgment Text
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CASE NO.:
Appeal (civil) 2757 of 2006
PETITIONER:
M/s WEP Peripherals Ltd
RESPONDENT:
Commissioner of Customs, Chennai
DATE OF JUDGMENT: 21/02/2008
BENCH:
S. H. Kapadia & B. Sudershan Reddy
JUDGMENT:
J U D G M E N T
CIVIL APPEAL NO. 2757 OF 2006
with Civil Appeal Nos. 4519/06 and 3679/05
KAPADIA, J.
Civil Appeal No. 2757/06:
This 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 ("CESTAT").
2. 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.
3. 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
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the law laid down by us in M/s Ferodo India Pvt. Ltd. (supra), the
appellant succeeds.
4. For 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.
5. Accordingly, Civil Appeal No. 2757/06 filed by the assessee is
allowed with no order as to costs.
Civil Appeal No. 4519/06:
6. 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.
Civil Appeal No. 3679/05:
7. 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.