Customs valuation includes contingent licence-fee consideration where exclusive purchase obligations form part of the import price.

The declared price of the imported machine was not the sole consideration for sale because the licence fee for know-how was waived only on condition that the importer continued to buy raw materials exclusively from the foreign supplier for seven years. That contingent obligation was treated as indirect payment of the waived amount, so the additional monetary value had to be added to the declared price under the Customs valuation framework and Section 14 of the Customs Act, 1962. The licence-fee-linked consideration was therefore includible in assessable value, and Customs' valuation was upheld.

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Issues: Whether the licence fee waived under the import contract, contingent upon exclusive purchase of raw materials from the foreign supplier, formed part of the assessable value of the imported photographic film processing machine.

Analysis: The declared price of the machine did not include the licence fee for the know-how embodied in the machine. The obligation to continue purchasing raw materials exclusively from the same supplier for seven years was the consideration for the waiver of that fee, so the importer indirectly paid the equivalent amount over that period. Since the price was not the sole consideration for the sale, the additional monetary value of that consideration was required to be added to the declared price under the Customs valuation framework and Section 14 of the Customs Act, 1962.

Conclusion: The contingent licence-fee-linked obligation was includible in the assessable value, and the valuation adopted by Customs was upheld.

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