S.B.SINHA, J. - (1.) LEAVE granted.
(2.) THIS appeal is directed against a final order dated 7/12/2005 passed by the Customs, Excise and Service Tax Appellate Tribunal (for short, 'the CESTAT') passed in Appeal Nos. C/231/04 and C/949/04 whereby and whereunder the appeal preferred by Respondent herein was allowed and that of Appellant herein was dismissed. Kirloskar Systems Limited entered into an agreement with Toyota Motor Corporation, Japan. It is also a major shareholder in the Respondent- Company. For the purpose of establishing an automobile manufacturing plant, Respondent imported some capital goods and parts thereof. Dispute between the parties revolves round the valuation of the said capital goods and parts imported by the respondent from Toyota Motor Corporation for manufacture of automobile in India. Under the agreements entered into by and between the respondent and the said Toyota Motor Corporation, royalty and know-how fees were to be paid.
(3.) ACCORDING to the Revenue such payments were to be added to the invoice value of the goods so as to arrive at a proper transaction value, in terms of Rule 9(1)(c) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (for short, 'the Rules). Payments of royalty, according to the Revenue, have a direct nexus to the imported goods as the same go into the manufacture of the licensed vehicles and spare parts. Before embarking upon the rival contentions of the parties, we may notice the basic and undisputed facts of the matter.;