Royalty not Includable in Transaction Value of Imported Raw Materials to demand Differential Customs Duty: CESTAT

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) ruled that royalty should not be included in the transaction value of imported raw materials, rejecting a demand for differential customs duty. \r

The appeal contested an Order-in-Appeal by the Commissioner of Customs, which upheld an Order-in-Original for demanding differential duty and imposing penalties. The tribunal found that the royalty payment was unrelated to the sale of imported goods and should not be considered a condition of sale. They emphasized that the payment for technology was distinct from the purchase terms and conditions, concluding that royalty payments should not affect the transaction value of imported raw materials. \r

Therefore, the tribunal ruled in favor of the appellant, ordering accordingly.