The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the payment of the license fee which was not a condition of sale cannot be included in the transaction value under rule 10(1)(c ) of the Customs Valuation Rules,2007.
Vestas Wind Technology India Pvt. Ltd, the respondent-assessee was engaged in the manufacture of a Wind Turbine Generator (WTG) suited for large wind farms.
The revenue appealed against the order passed by the Commissioner (Appeals) for quashing the inclusion of the license fee in the invoice value by the adjudicating authority.
Ananda Lakshmi Ganeshram, the counsel for the department contended that the import of the components of the Wind Mill System was of no use unless the technical know-how of assembling and installation, and manufacturing the windmill was also obtained and thus the License Fee was nothing but a condition of sale of the imported items though not specifically mentioned in the agreement.
Rohan Muralidharan, the counsel for the assessee contended that the license fee payable by the assessee to its related party suppliers was not related to imported goods and cannot be added to the invoice value.
Further submitted that only if the license fee was related to the import of goods and was payable as a condition of sale, the same was required to be added to the transaction value.
The bench observed that the payment of the license fee was for each WTG commissioned and it cannot be said that the license fee was a condition of the sale of the parts and components imported.
The two-member bench comprising Sulekha Beevi (Judicial) and Vasa Seshagiri Rao (Technical) the order passed by the Commissioner (Appeals) does not require any interference and is liable to be sustained while dismissing the appeal filed by the revenue.
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