ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 14.06.2025
CESTAT Chennai- Royalty Payments Not Dutiable Under Customs Valuation Rules
In the case of M/s. KAMAZ Motors Ltd. vs. Principal Commissioner of Customs, Chennai-II. The case revolved around the contentious inclusion of royalty payments in the assessable value of imported CKD kits under Rule 10 of the Customs Valuation Rules, 2007.
Case Background
KAMAZ Motors Ltd., formerly Kamaz Vectra Motors Ltd., imported CKD kits for manufacturing heavy-duty trucks in India from its related foreign supplier M/s. CJSC Kamaz Foreign Trade Company, Russia. The Customs authorities had provisionally assessed the imports and later issued a Show Cause Notice proposing to add royalty of USD 450 per CKD kitβpaid to another group entity M/s. OJSC Kamaz Inc.βto the assessable value, alleging it to be a condition of sale.
The Department relied on Rule 10(1)(c) and 10(1)(e) of the Customs Valuation Rules, 2007, stating that royalty payments were directly linked to the import of CKD kits and therefore must be included in the transaction value.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: CESTAT Chennai
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