M/S. WEP PERIPHERALS LTD.versusCOMMISSIONER OF CUSTOMS, CHENNAI

                                    12008] 3 s.c:R. 143

        'r
"'                           MIS. WEP PERIPHERALS LTD.                       A
                                          v.
                       COMMISSIONER OF CUSTOMS, CHENNAI
                           (Civil Appeal No. 2757 of 2006)
                                   FEBRUARY 21, 2008
                                                                             B
                   (S.H. KAPADIA AND B. SUDERSHAN REDDY, JJ.)
 •
     __,,
                    Customs Valuation (Determination of Price.of Imported
                Goods) Rules, 1988; r.9(1)(c) and 9(1)(e):
                     Import .of shuttles used in manufacture of printers - c
                Authorities loading royalty/licence fee on price of imported
                goods - Correctness of- Held: Incorrect - Assessee received
                order for bulk supply of the goods in question, thus, giving
                discount by lowering price of the goods - Material in support
                thereof not considered by adjudicating authority - Royalty D
     ...._..,   payment was not condition pre-requisite to the sale of the
                goods in question - View of the authority erroneously affirmed
                by the Tribunal - Hence, impugned judgment set aside.
                      The question which arose for determination in this
                                                                              E
                appeal was as to whether the adjudicating authority was
                entitled to load the royalty/licence fee payment on the price
                of the imported goods, viz, the shuttle(s) by taking only
                its peak price and not the price negotiated between the
                parties.
                                                                              F
                      Allowing the appeals, the Court
                     HELD: 1.1 Since the importer received an order for
                bulk supply, there was lowering of price of the goods in
                question. This factor was not at all considered by the
                adjudicating authority under rule 9(1 )(c) of the Customs G
                Valuation (Determination of Price of Imported Goods)
                Rules, 1988. (Para - 3) [145-D, E]
                    1.2 There is nothing to indicate that royalty payment
                                           143                               H
     144      SUPREME COURT REPORTS               [2008) 3 S.C.R.


A was a condition pre-requisite to the sale of the goods in.
  question, the shuttle. The only ground on which the
  adjudicating authority has held against the appellant is
  that the shuttle is an integral part of the printer. This view ·
  has been accepted by the Tribunal, erroneously. The
B 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 exists no reason
C to reject the said correspondence, particularly when it was
  placed before the arguments stood concluded. (Para - 3)
  (145-F, G; 146-A]
       Commissioner of Customs vs. Mis. Ferodo India Pvt. Ltd.
  - decided by the Supreme Court on February 21, 2008 in
D C.A.No. 8426 of 2002 - relied on.
          CIVILAPPEL.l..ATE JURISDICTION : Civil Appeal No. 2757
     of 2006
       From the final Order No .. 103/2006 dated 24/1/2006 of
E the CESTAT, South Zonal Bench, Bangalore in Appeal No. Cl
  276/2004.
                                WITH
           Civil Appeal Nos. 4519 of 2006 and 3679 of 2005
F         V. Lakshmi Kumaran, Alok Yadav and M.P. Devanath for
     the Appellant.
         Brijender Chahar, Abhinav Jain, Jyoti Chahar, J.S. Malik,
     Deepak Thakur and B. Krishna Prasad for the Respondent.
 G         The Judgment of the Court was delivered by
           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
 H Customs, Excise and Se1vice Tax Appellate Tribunal
       M/S. WEP PERIPHERALS LTD. v. COMMISSIONER                      145
             OF CUSTOMS, CHENNAI [KAPADIA. J.]

     ("CESTAT").                                                             A
           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 ::>f Printers. The integral part of a printer is what is
     called as a shuttle. In the present case, we are concerned with         8
     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             C
     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 D
      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 E
      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 F
      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 agC!inst the appellant herein is .
      that the shuttle is an integral part of the printer. This view has · G
      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 H
    146       SUPREME COURT REPORTS                    [2008] 3 S.C.R.


A   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 the law laid down by us in Mis Ferodo                   ...
8   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.
c
        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
0
    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
E 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
F   v. M/s Ferodo India Pvt. Ltd. (Civil Appeal No. 8426/02) this
    appeal is allowed with no order as to costs.
    S.K.S.                                         Appeals allowed.