Technical know-how fee not includible in customs value where it relates to manufactured goods, not imported components.

A disclosure fee paid under a technical collaboration agreement for transfer of know-how to manufacture hydraulic excavators is not includible in the assessable value of imported components under Rule 9(1)(c) of the Customs Valuation Rules, 1988. Inclusion requires cumulatively that the fee be related to the imported goods and payable as a condition of sale. The technical know-how here related to the manufactured licensed product, not to the imported components themselves, so the first condition was not satisfied. Because the statutory requirements are cumulative, failure of that condition prevents loading the fee into the transaction value of the imported components.

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Issues: Whether the disclosure fee payable under the technical collaboration agreement was includible in the assessable value of the imported components under Rule 9(1)(c) of the Customs Valuation Rules, 1988.

Analysis: The disclosure fee was paid for transfer of technical know-how for manufacture of hydraulic excavators, and the agreements showed that the imported components could be used only for manufacturing the licensed products. For inclusion under Rule 9(1)(c), two conditions had to be satisfied cumulatively: the fee had to be related to the imported goods, and it had to be payable as a condition of sale. The material nexus of the technical know-how was with the manufactured product, not with the imported components themselves. Since the imported components were not the licensed goods, the first statutory condition failed. As the conditions were cumulative, failure of the first condition was sufficient to reject inclusion.

Conclusion: The disclosure fee was not addable to the transaction value of the imported components, and the assessable value could not be loaded with that amount.

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