Assessable value of imports: linked technical know-how charges may be added, but post-importation erection and commissioning costs are excluded.

Technical assistance, technical know-how and related consultancy charges under a linked collaboration agreement were treated as includible in the assessable value of imported machinery where the agreements were read together and the payment was a condition of the sale of the imported goods. By contrast, charges for erection, assembly and commissioning after import were treated as separate from the price of the machinery and were excluded from valuation, absent a sufficient basis to show that they formed part of the sale price. The stated ratio is that linked commercial payments are added to assessable value only when tied to the sale condition, while post-importation erection or commissioning costs are ordinarily excluded.

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Issues: (i) Whether technical assistance, technical know-how and related consultancy charges paid under the collaboration arrangement were includible in the assessable value of the imported machinery. (ii) Whether charges for erection and commissioning of the plant were includible in the assessable value of the imported goods.

Issue (i): Whether technical assistance, technical know-how and related consultancy charges paid under the collaboration arrangement were includible in the assessable value of the imported machinery.

Analysis: The agreements for supply of machinery and for collaboration were treated as interconnected and were read together. The payment for technical assistance and know-how was linked to the import of the machinery and was required under the commercial arrangement with the foreign collaborator. On that basis, such payment was held to fall within the scope of the valuation rules governing additions to the price actually paid or payable, as a condition of the sale of the imported goods.

Conclusion: The technical assistance and technical know-how charges were held includible in the assessable value.

Issue (ii): Whether charges for erection and commissioning of the plant were includible in the assessable value of the imported goods.

Analysis: Charges for erection, assembly, commissioning and similar post-importation activities were treated as distinct from the price of the imported machinery. The valuation rules and interpretative note excluded such post-importation construction or technical assistance costs, unless they formed a condition of the sale of the imported goods. No sufficient basis was found to treat the erection and commissioning charges as part of the price of the imported goods.

Conclusion: The erection and commissioning charges were held not includible in the assessable value.

Final Conclusion: The importer succeeded on the principal relief, and the additional post-importation charges were excluded from valuation, while the connected challenge on the technical assistance component was decided in a manner adverse to the importer only to the extent indicated by the majority on that component.

Ratio Decidendi: Amounts payable under a linked commercial arrangement are includible in the assessable value only when they are a condition of the sale of the imported goods, whereas charges for post-importation erection or commissioning are excluded unless they are part of the price of the imported goods.

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