Judgment:
1. The appellants herein are engaged in the manufacture of abrasive machines and lapping and polishing machines at their factory in Rabale Navi Mumbai, in technical collaboration with M/s Speedfam Co Ltd., Japan. In terms of the technical collaboration agreement entered into between them and the foreign collaborators, they are required to pay a lump sum fee of US $50000/- for the technical know-how to the foreign collaborator. The Deputy Commissioner of Customs found that the royalty and the technical know-how fee paid by them to the foreign collaborators was not relatable tot eh imported goods, namely components raw materials required for manufacture of the machines in India, and also found that it is not a condition of sale and accordingly he accepted the transaction value as per Rule 4(3) (A) of the Customs Valuation Rules, 1988.
2. The Revenue preferred an appeal before the Commissioner of Customs (Appeals) who accepted the contention of the department and, held that technical know-how fee and royalty are related to the imported goods and are a condition of sale of the imported goods Hence this appeal by the importers.
3. We have heard both sides and perused the agreement in question. It is clear that the payment of technical know-how fee and royalty are not related to the imported components and raw materials and the finding of the Commissioner (Appeals) that they are related to and are a condition of sale for import of the goods, as without the transfer of technical know-how and licence to manufacture, machine and parts would be of no use to the appellants, cannot be upheld, in the light of the decisions of the Larger Bench of this Tribunal in Hoerbiger India Ltd v.Commissioner (T) and in S.D. Technical Service v.Commissioner . We therefore set aside the inclusion of the technical know-how fee and royalty, set aside the impugned order and allow the appeal.