Customs valuation: unpaid royalty not added to assessable value where negotiated invoice price remained genuine.

Royalty was not includible in the assessable value of imported goods where no royalty was actually paid, the joint venture had become a 100% subsidiary under the approval conditions, and the imports were made on the supplier's price list at a negotiated and genuine invoice value. The relationship between the parties was found not to have influenced the price, and no commission was paid for the imports. On those facts, the declared transaction value was accepted under Rule 4 of the Customs Valuation Rules, 1988, and Rule 9(1)(c) did not justify enhancement.

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Issues: Whether the declared transaction value of the imported goods was liable to be rejected and enhanced by adding royalty payments under the Customs Valuation Rules, 1988.

Analysis: The agreement provided for royalty, but no royalty was actually paid because the joint venture became a 100% subsidiary under the relevant approval conditions. On the facts, the goods were imported on the basis of the supplier's price list and the pricing was treated as genuine and negotiated. The relationship between the parties was found not to have influenced the invoice value, and no commission was paid for the imports. In these circumstances, royalty was held not to be includible in the assessable value under Rule 9(1)(c) of the Customs Valuation Rules, 1988, and the declared value was accepted under Rule 4 of those Rules.

Conclusion: The appeal filed by the Department failed and the order accepting the declared transaction value was sustained.

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