Customs valuation excludes technical know-how fee absent nexus with imported goods; post-import manufacturing payments are not includible.

Technical know-how, licence fee or royalty is includible in the assessable value of imported goods only where it has a direct or indirect nexus with those goods. Here, the imported capital goods, machinery and plant were procured from other manufacturers, while the collaborator arrangement related to manufacture of carburetors in India. Because the disclosure fee or technical know-how fee was connected only with post-import manufacturing activity and not with the import transaction itself, it could not be added to customs value. The attempted inclusion was therefore unsustainable under customs valuation principles.

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Issues: Whether the disclosure fee or technical know-how fee paid to the foreign collaborator was includible in the assessable value of the imported capital goods, machinery and plant and equipment under the Customs valuation law.

Analysis: The imported goods were found to have been procured from other manufacturers and not from the collaborator, and the technical know-how arrangement related to manufacture of carburetors in India. In the absence of any direct or indirect link between the imported goods and the payment made for technical know-how, the fee could not be brought within the assessable value. The principle applied was that royalty or licence fee is includible only where it is related to the imported goods, directly or indirectly, and not where it is connected only with a post-import manufacturing activity.

Conclusion: The disclosure fee or technical know-how fee was not includible in the value of the imported goods and the impugned inclusion was unsustainable.

Ratio Decidendi: Technical know-how, licence fee or royalty is includible in the assessable value only when it has a direct or indirect nexus with the imported goods; a payment relatable only to post-import manufacture is not includible.

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