M/S. WEP PERIPHERALS LTD. versus COMMISSIONER OF CUSTOMS, CHENNAI

Citation: [2008] 3 S.C.R. 143 · Decided: 21-02-2008 · Supreme Court of India · Bench: S.H. KAPADIA · Disposal: Appeal(s) allowed

Judgment (excerpt)

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 
G 
adjudicating authority under rule 9(1 )(c) of the Customs 
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 

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