K.L. Rekhi, Member (T)

1. The respondents (hereinafter referred to as 'Maruti') are manufacturers of motor cars in India in collaboration with Suzuki Motor Company Limited, Japan (hereinafter referred to as 'Suzuki')- The two parties have entered into three agreements :

(1) Joint Venture Agreement :- Under this Agreement Suzuki acquired 26% equity shares in Maruti as also proportional representation on the Board of Directors of Maruti.

(2) Licence Agreement :- Under this Agreement, Maruti acquired the right and technical knowhow to manufacture cars and their components in India to the patents, designs and specifications of Suzuki on payment of lump sum royalty of $ 24/- lakhs plus 3% running royalty.

(3) Purchase and Supply Agreement :- This Agreement related to import of SKD/CKD packs and complete vehicles from Suzuki, Japan.

In the background of royalty payments, the Assistant Collector loaded the invoice prices of SKD/CKD packs and complete vehicles imported by Maruti from Suzuki by 1%, for the purpose of assessment of customs duty. In appeal, the Collector (Appeals) held that the loading was not called for and that the invoice price was acceptable as the basis for assessment un