Tribunal rules technical fees not to be added to imported goods' value, citing lack of nexus.

The Tribunal rejected the Revenue's appeal regarding the assessment of technical know-how fees in relation to imported goods, emphasizing that the fees were not to be added to the declared value of the imported materials. The lower appellate authority's decision to set aside the inclusion of the fees in the value of imports was upheld due to the lack of nexus between the fees and the imported goods. The Tribunal highlighted that the technical know-how fees were related to setting up machinery for commercial production, not directly linked to the imported goods themselves.

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Issues:
1. Assessment of technical know-how fees in relation to imported goods.

Analysis:
The judgment deals with the assessment of technical know-how fees paid by the respondents to their foreign collaborators in relation to imported goods. The original authority had included the US $ 15,000 payment in the value of imports, resulting in a 4.1% increase. The lower appellate authority, however, found no nexus between the technical know-how fees and the imported goods, setting aside the Order-in-Original, which led to the Revenue's appeal.

The Revenue failed to provide a copy of the agreement between the respondents and the foreign collaborators. However, it was noted that the technical know-how provided assistance in setting up and commissioning necessary machines for commercial production, not directly related to the imported goods. The Department did not claim that the respondents imported machinery from collaborators or paid fees for such machinery. The technical know-how fee was associated with procuring machines and starting commercial production of office stationery from imported raw materials, not with the imported polypropylene sheets/components used for making office stationery products. Consequently, the Department's argument to add the technical know-how fee to the declared value of imported materials lacked a valid basis.

Based on the above analysis, the Tribunal rejected the Revenue's appeal, emphasizing that the technical know-how fee was not to be proportionately added to the declared value of the imported polypropylene sheets/components. This decision was pronounced in court on 31-8-2005.

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