Composite technology-collaboration valuation may be apportioned reasonably, with penalty reduced where excessive on the facts.

Where imported technical literature and drawings formed part of a composite technology-collaboration arrangement, their assessable value could be determined by a reasonable apportionment of the overall consideration rather than excluding them entirely from customs valuation. The unimplemented 14" picture-tube collaboration did not separately carry a stipulated price, and the imported volumes were not independently saleable goods, so duty was confined to the apportioned value of the drawings. On penalty, the prior finding of liability had attained finality, but the amount was considered excessive on the facts and was reduced.

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Issues: (i) Whether the value of the imported technical literature and drawings relating to the unimplemented 14" picture-tube collaboration could be excluded from customs valuation or required broad apportionment of the composite collaboration fee; (ii) Whether the penalty imposed was liable to be sustained or reduced.

Issue (i): Whether the value of the imported technical literature and drawings relating to the unimplemented 14" picture-tube collaboration could be excluded from customs valuation or required broad apportionment of the composite collaboration fee.

Analysis: The imported volumes were not independently saleable goods and technology transfer could not be effected merely through delivery of those volumes. The collaboration for 14" picture tubes did not materialise and no payment was made for that segment. The agreement showed that the consideration was composite and covered different elements of technology transfer and assistance. Since the agreement did not separately stipulate the price for each element, a broad apportionment of the total consideration was appropriate.

Conclusion: The appellant's contention was accepted in part and the duty demand was confined to the apportioned value of the drawings at Rs. 14.47 lakhs, with the balance set aside.

Issue (ii): Whether the penalty imposed was liable to be sustained or reduced.

Analysis: The earlier finding that penalty was exigible had attained finality, leaving only the quantum open. In the circumstances, the originally sustained penalty was considered excessive and a reduced penalty was found sufficient.

Conclusion: The penalty was reduced to Rs. 1 lakh.

Final Conclusion: The appeal succeeded only to the extent of curtailing the duty liability and reducing the penalty, while the remaining demand was not sustained.

Ratio Decidendi: Where imported materials form part of a composite technology-collaboration arrangement, their assessable value may be determined by a reasonable apportionment of the overall consideration, and penalty may be moderated to reflect the facts and circumstances.

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