Customs valuation excludes design and testing charges already included in invoice value; confiscation and penalty fail.

Design, drawings, technical specifications, testing and modification charges were not separately includible in the assessable value of the imported machine because the supplier's documents showed they were already part of the invoice price. Rule 9(1)(b)(iv) of the Customs Valuation Rules, 1988 applies only when such charges have not been included in the price actually paid or payable. In the absence of evidence discrediting the supplier's correspondence or proving suppression or falsity, there was no basis for re-adding the charges to value. Confiscation, redemption fine and penalty were therefore unsustainable.

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Issues: Whether the design and testing charges were includible in the assessable value of the imported machine, and whether the consequential confiscation and penalty were sustainable.

Analysis: The documentary material from the foreign supplier showed that the design, drawings, technical specifications, testing and modification charges formed part of the machine cost and that the amount had already been included in the invoice value. Rule 9(1)(b)(iv) of the Customs Valuation Rules, 1988 applies only where such charges have not been included in the price actually paid or payable. The Revenue led no evidence to discredit the supplier's correspondence or to establish suppression or falsity, and the adjudication was based on assumption rather than proof. Once the charges were found to be included in the invoice value, there was no basis for adding them again to the assessable value or for treating the goods as liable to confiscation.

Conclusion: The addition of design and testing charges to value was unwarranted, and the confiscation, redemption fine and penalty could not be sustained in favour of the assessee.

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