Customs valuation of separately contracted drawings and designs cannot be added to turbine import value absent a sale condition.

Rule 9(1)(e) of the Customs Valuation Rules, 1988 permits addition only of payments actually made or payable as a condition of sale of the imported goods. Drawings, designs and documentation imported under a separate contract were meant for post-import activities and were not shown to be a compulsory part of the price of the turbine and generator. As the two contracts, the imported items and the consideration payable under each were separate, the cost of the drawings and designs could not be loaded onto the assessable value of the earlier imported goods. The proposed addition was therefore unjustified, and confiscation and penalty could not be sustained on that basis.

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Issues: Whether the value of drawings, designs and documentation imported under a separate contract could be added to the assessable value of the earlier imported turbine and generator under Rule 9(1)(e) of the Customs Valuation Rules, 1988, and whether the confiscation and penalty could be sustained.

Analysis: Rule 9(1)(e) permits addition only of payments actually made or payable as a condition of sale of the imported goods. The imported drawings and designs were meant to facilitate post-import activities and were covered by a distinct contract from the turbine and generator supply contract. The contracts did not show that the sale of the turbine and generator was conditional upon the purchase of the drawings and designs, nor that the payment for them was an obligatory part of the price of the earlier imported goods. The two imports, the goods covered, and the consideration payable under each contract were separate, so the amount paid for the drawings and designs could not be loaded onto the value of the turbine and generator.

Conclusion: Rule 9(1)(e) was not attracted, and the addition of the cost of drawings and designs to the value of the earlier imported goods was unjustified. The confiscation and penalty could not stand on that basis.

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