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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether lump sum technical know-how and royalty payments under the technology transfer agreement were includible in the assessable value of imported goods under Rule 9(1)(c) of the Customs (Valuation) Rules, 1988.
Analysis: Addition to the price paid or payable is permissible only where the royalty or licence fee is related to the imported goods and is required to be paid, directly or indirectly, as a condition of sale. The agreement in question was for technology assistance for new models and did not relate the lump sum know-how fee to any specific imported goods. The payment was for post-importation technology assistance and not for valuation of know-how per se. In the absence of a legal nexus between the payment and the imported goods, the amount could not be loaded into the assessable value.
Conclusion: The know-how fee was not includible in the value of the imported goods and the addition made in assessment was unsustainable.
Final Conclusion: The order of inclusion of technical know-how fee in the assessable value was set aside and the assessee obtained relief.
Ratio Decidendi: Under Rule 9(1)(c), only royalties or licence fees that are related to the imported goods and payable as a condition of sale can be added to assessable value; post-importation technology payments unconnected with the imported goods are excluded.
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