Customs duty on technical know-how materials fails where no tangible goods cross the customs frontier.

Customs duty could not be demanded on alleged import of drawings, designs, flow charts and technical data because no tangible media or chattel was shown to have crossed the customs frontier. The materials relied on, including retracted statements, collaboration agreements, remittance documents and correspondence, showed only transfer of know-how and technology, not proof that dutiable goods were imported as physical articles. Mere payment of technology fees was insufficient to establish import of goods for customs purposes. As the alleged import itself was not proved, the related valuation exercise, confiscation, redemption fine, interest and penalty also failed.

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Issues: Whether customs duty could be demanded on the alleged import of drawings, designs, flow charts and technical data when no tangible media or chattel was found to have crossed the customs frontier, and whether the consequential demand of interest, confiscation, redemption fine and penalty could survive.

Analysis: The evidence relied upon by the adjudicating authority consisted mainly of retracted statements, collaboration agreements, remittance documents and letters describing transfer of technical know-how. Those materials showed transfer of knowledge and technology, but did not establish delivery or import of tangible drawings, designs or other media as goods. Mere remittance of technology fee did not by itself prove import of dutiable articles. The absence of any seized or located tangible goods, and the absence of reliable material showing that the alleged goods were brought into India as baggage by the identified visitors, was fatal to the levy. The reasoning also treated the levy as unsustainable where only intangible information was transferred without a physical medium capable of being regarded as goods for customs purposes. Once the import itself was not proved, the consequential findings on valuation, confiscation, redemption fine, interest and penalty also could not stand.

Conclusion: The customs duty demand was not sustainable and the connected confiscation, fine, interest and penalty were also liable to be set aside in favour of the assessee.

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