Customs valuation: pre-import inspection charges included, but separate post-import erection and commissioning costs excluded.

Inspection charges incurred to obtain a pre-import certificate were held includible in the customs assessable value because the purchase arrangement made that certificate a contractual obligation of the seller, and the buyer incurred the cost to satisfy that obligation before import. By contrast, erection, installation and commissioning charges, together with allied post-importation services, were excluded because the cranes were sold in disassembled form, title and risk passed on shipment, and the service arrangement was separate; those costs were not a condition of sale or part of the price of the imported goods. The valuation principle applied is that only amounts incurred as a contractual condition of sale are includible.

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Issues: (i) Whether inspection charges incurred for obtaining the inspection certificate before import were includible in the assessable value of the imported cranes; (ii) Whether the costs of erection, installation and commissioning and allied post-importation services were includible in the assessable value as a condition of sale.

Issue (i): Whether inspection charges incurred for obtaining the inspection certificate before import were includible in the assessable value of the imported cranes.

Analysis: The purchase agreement required the seller to provide an inspection certificate for the machinery and the inspection was not a voluntary or optional exercise unconnected with the contract. The payment may have been made separately, but it was incurred to satisfy an obligation of the seller under the purchase arrangement and was incurred before import. Charges incurred by the buyer on behalf of the seller, where the obligation flows from the contract of sale, form part of the value for customs purposes.

Conclusion: The inspection charges were correctly held includible in the assessable value and the Revenue succeeded on this issue.

Issue (ii): Whether the costs of erection, installation and commissioning and allied post-importation services were includible in the assessable value as a condition of sale.

Analysis: The contracts showed that the cranes were sold in disassembled form and that title and risk passed on shipment, while the service contract for erection, installation and commissioning was a separate arrangement. The contractual terms did not make post-importation erection or commissioning a condition of sale, and the charges were distinguishable from the price actually paid or payable for the imported goods. Where such post-importation activities are not a condition precedent to sale, they cannot be added to the customs assessable value under the valuation rules.

Conclusion: The erection, installation and commissioning charges were not includible in the assessable value and the assessee succeeded on this issue.

Final Conclusion: The appeals were disposed of by upholding inclusion of inspection charges but excluding the post-importation erection, installation and commissioning costs from the assessable value, with consequential relief flowing accordingly.

Ratio Decidendi: Only amounts incurred as a condition of sale of the imported goods are includible in assessable value; separate post-importation service charges that are not part of the price of the imported goods and are not contractually mandatory for the sale are excluded.

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