Know-how fee not added to assessable value where it was unrelated to imported goods and not a sale condition.

A technology transfer or know-how fee is includible in the assessable value of imported goods only if it is shown to be related to those goods and to form a condition of their sale. Here, the fee was paid for manufacture and assembly of clutch systems in India, while the imported components were only a small part of the inputs used in the finished product. The agreement did not make the foreign supplier's sale of the components conditional on payment of the fee, so the fee was treated as payment for know-how and not as part of the price of the imported goods. The fee was therefore not includible in assessable value.

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Issues: Whether the technology transfer fee paid under the agreement was includible in the assessable value of the imported components under the Customs (Valuation) Rules, 1988.

Analysis: The fee was paid for the manufacture and assembly of clutch systems in India, while the imported goods were only a small part of the inputs used for the finished product. The agreement did not show that the foreign supplier's sale of components was conditional upon payment of the technology fee. On the facts, the fee was for transfer of know-how and not a payment linked to the imported goods or to the price of those goods. The facts were also distinguishable from the precedent relied upon by the Revenue, where the technical fee formed a condition of sale of the imported capital goods.

Conclusion: The technology transfer fee was not includible in the assessable value of the imported goods, and the appeal succeeded.

Ratio Decidendi: A technology or know-how fee is includible in the assessable value only when it is shown to be related to the imported goods and to form a condition of their sale.

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