![]() Per Hasan Lah FCJ delivering the judgment of the court: Held (allowing appeal with costs setting aside orders of Court of Appeal reinstating orders of the High Court) 5(1)(a)(iv) of the said Regulations and (ii) whether the royalty was an indirect consideration by the plaintiff as a condition of sale for the entry of the goods to be exported into Malaysia. 4 of the Regulations read together with r. The questions for which leave to appeal to this court were granted were (i) whether the royalty paid by the plaintiff to Nike International Ltd could be considered as a condition of sale for the goods to be exported to Malaysia and as an item for the adjustment in accordance with r. Nike New Zealand Ltd (' Nike New Zealand') and in reversing the decision of the JC, held that the royalties payable by the plaintiff after the goods were sold were to be regarded as an item to be included for adjustment of the price to be paid or payable. The Court of Appeal, however, had agreed with the decision in Chief Executive of New Zealand Customs Service v. Mattel Canada Inc (' Mattel Canada') and allowed the plaintiff's appeal. The Judicial Commissioner ('JC'), after carefully considering the decisions from the Commonwealth countries on this issue, had agreed with the views expressed in the case of Deputy Minister of National Revenue v. ![]() The plaintiff argued that the royalties were not paid as a condition of the sale of the goods for export to Malaysia because the sale contract and the royalties contract were separate agreements made between different parties and that the party to whom the royalties were payable, Nike International Ltd, did not have control of the situation in Malaysia beyond the ordinary rights of a licensor of intellectual property. Hence, the plaintiff appealed to the High Court. The plaintiff lodged an appeal to the Director General of Customs Malaysia ('the second defendant') which was dismissed. 5(1)(a)(iv) of the Customs (Rules of Valuation) Regulations 1999 ('the Regulations'). A letter of demand dated 15 August 2003 was therefore issued by the first defendant to the plaintiff demanding payment of RM3,292,076.91 (which was subsequently reduced to RM2,675,344.19) as customs duties and sales tax payable by the plaintiff under reg. The Royal Malaysian Customs Department ('the first defendant'), after carrying out an audit exercise on the declared value of goods imported by the plaintiff, ruled out that the audit examination showed that the royalty cost was not included as part of the paid, or payable price of the goods. Nike Inc (USA) ('Nike USA') was the ultimate holding company of Nike International Ltd ('the licensor') and the plaintiff. Nike Sales Malaysia Sdn Bhd ('the plaintiff') imported into Malaysia footwear, apparel, sports equipment and accessories under the Nike brand ('the licensed goods').
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