Post-importation technical charges are excluded from customs value when not a condition of sale; time-barred corrigendum demand fails.

A belated corrigendum expanding a customs demand to include income-tax paid for a foreign supplier was held time-barred where the original notice did not cover that component and the assessment was not provisional. The decision also reiterates that royalty, design, engineering and consultancy charges are not includible in the assessable value of imported goods when they relate to post-importation services and are not shown to be a condition of sale. On that reasoning, Rule 9(1)(c) of the Customs Valuation Rules, 1988 was inapplicable and the demand could not be sustained.

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Issues: (i) Whether the demand raised by corrigendum for inclusion of income-tax paid on behalf of the foreign supplier was barred by limitation. (ii) Whether royalty, design, engineering and consultancy charges were includible in the assessable value of the imported goods.

Issue (i): Whether the demand raised by corrigendum for inclusion of income-tax paid on behalf of the foreign supplier was barred by limitation.

Analysis: The notice originally issued did not cover income-tax, and the later corrigendum sought to enlarge the scope after a substantial lapse of time. The assessment was not shown to be provisional, and the demand for short levy proceeded on a final assessment basis. A belated expansion of the demand could not be sustained in these circumstances.

Conclusion: The demand on account of income-tax was barred by limitation and was not sustainable.

Issue (ii): Whether royalty, design, engineering and consultancy charges were includible in the assessable value of the imported goods.

Analysis: The contracts showed that one agreement covered supply of equipment, while the royalty agreement covered process and installation design, drawings, documentation, consultancy, erection, testing and commissioning. These were post-importation activities and the royalty was not shown to be a condition of sale of the imported goods. Rule 9(1)(c) of the Customs Valuation Rules, 1988 was therefore inapplicable, and the principle that post-importation technical know-how fee is not includible governed the controversy.

Conclusion: The royalty and related charges were not includible in the assessable value.

Final Conclusion: The impugned demand could not be sustained, and the appeal succeeded with consequential relief.

Ratio Decidendi: Amounts paid for post-importation technical services or consultancy are not includible in customs assessable value unless they form a condition of sale of the imported goods; a belated enlargement of a demand by corrigendum cannot sustain a time-barred levy on a finally assessed import.

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