Royalty and technical know-how fees are excluded from customs value absent proof they affected the import price.

Royalty and technical know-how fees are not includible in the customs assessable value unless evidence shows that such payments, or the parties' relationship, influenced the price of the imported goods or introduced extra commercial consideration. On the facts stated, the importer could source raw materials from other suppliers, the know-how agreement related to manufacture in India rather than the import price, and no material showed price depression. The declared transaction value was therefore accepted as arm's length, and the valuation challenge was rejected.

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Issues: Whether royalty and technical know-how fees were required to be included in the assessable value of the imported goods, and whether the relationship between the parties had influenced the invoice price so as to reject the declared transaction value under the Customs Valuation Rules, 1988.

Analysis: The importer was free to source raw materials from other suppliers and was under no obligation to purchase them only from the foreign collaborator. The know-how agreement related to manufacture in India and not to the supply price of the imported components. No material showed that the royalty or lump-sum know-how payment was linked to the import price or that any extra commercial consideration depressed the declared value. The prices were found to be at arm's length, and the relationship did not influence the invoice price.

Conclusion: Royalty and technical know-how fees were not includible in the assessable value on the facts found, and the declared transaction value was correctly accepted. The departmental appeal failed.

Final Conclusion: The order of the lower authority was upheld and the challenge to the valuation was rejected.

Ratio Decidendi: Royalty or technical know-how fees are not includible in customs assessable value unless there is evidence that such payments or the parties' relationship influenced the price of the imported goods or introduced extra commercial consideration.

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