Assessable value of imports excludes technical know-how fee and royalty linked to post-importation manufacture and sales.

Technical know-how fee and running royalty paid under the collaboration agreements were not includible in the assessable value of imported CKD components and parts. The agreements related the technical assistance and licence to design, development, manufacture, assembly, testing, sale and after-sales service of cars manufactured in India, and the royalty was linked to ex-factory vehicle price and the indigenised portion of CKD components. These features showed the payments were connected to post-importation activities, not to the imported goods themselves, and no fresh factual or legal basis was shown to disturb the declared transaction value or establish that the payments were a condition of sale. The appellant therefore succeeded before CESTAT Mumbai.

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Issues: Whether technical know-how fee and running royalty paid under the collaboration agreements were includible in the assessable value of the imported CKD components and parts.

Analysis: The agreements showed that the technical assistance and licence related to design, development, manufacture, assembly, testing, sale and after-sales service of the cars manufactured in India. The royalty structure was linked to the ex-factory price of vehicles manufactured in India and to the indigenised portion of CKD components, showing that the payments were connected to post-importation activities and not to the imported goods themselves. The agreements were found to be identical to earlier agreements already examined in the appellant's own case, where such licence fee and royalty had been held not to form part of the import value. The Revenue did not establish any fresh factual or legal basis to show that the declared price was not the true transaction value or that the payments were a condition of sale of the imported goods.

Conclusion: The technical know-how fee and royalty were not includible in the assessable value of the imported goods, and the appellant succeeded.

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