Technical know-how payments form part of import value when linked to a single collaboration contract and sale condition.

Technical know-how and engineering transfer charges were held includible in the assessable value of imported machinery where the supply of machinery and the know-how arrangement formed one interdependent collaboration contract for manufacture of metallised products. Because the know-how payment was linked to the supply of the goods and operated as a condition of sale, it formed part of the transaction value under Rule 9(1)(e) of the Customs Valuation Rules, 1988. The challenge to exclusion of that payment therefore failed.

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Issues: Whether the amount paid towards technical know-how and engineering transfer under the collaboration agreement was includible in the assessable value of the imported machinery under Rule 9(1)(e) of the Customs Valuation Rules, 1988.

Analysis: The machinery supply and the know-how arrangement formed part of a single collaboration contract for manufacture of metallised products. The imported machinery and the technical assistance were treated as interdependent, and the payment for know-how was found to be linked with the supply of the goods. On that basis, the amount paid under the agreement was regarded as a condition of sale and therefore includible in the transaction value.

Conclusion: The know-how payment was rightly added to the assessable value under Rule 9(1)(e) of the Customs Valuation Rules, 1988, and the assessee's challenge failed.

Ratio Decidendi: Where technical know-how and machinery are supplied under a single interrelated contract and the payment for know-how constitutes a condition of sale, such payment forms part of the assessable value of the imported goods.

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