Assessable value of imports cannot include royalty or know-how fee without a direct nexus to the imported goods.

Technical know-how fee and royalty were not includible in the assessable value of imported components because the agreement did not require exclusive sourcing from the foreign collaborator and the payments were linked to goods manufactured in India, not to the imported parts. In the absence of a contractual condition connecting those payments to the imported goods, the alleged relationship between the parties did not affect price and could not justify enhancement of assessable value. The valuation demand was therefore correctly dropped.

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Issues: Whether the assessable value of imported components was liable to be enhanced by adding technical know-how fee and royalty on the ground that the importer and foreign collaborator were related and the alleged relationship affected the price of the imported goods.

Analysis: The agreement allowed the importer to procure components, parts and accessories from within India or abroad, subject only to specification and approval requirements. There was no binding obligation to purchase the goods exclusively from the foreign collaborator, and the royalty related to goods manufactured in India rather than to the imported components. In the absence of a condition linking the imported goods to the alleged payments, the relationship did not affect the assessable value.

Conclusion: The technical know-how fee and royalty were not includible in the assessable value of the imported components, and the order dropping the valuation demand was correctly upheld.

Ratio Decidendi: Amounts such as technical know-how fee or royalty are includible in the assessable value only where they are shown to be a condition of sale or otherwise have a direct nexus with the imported goods.

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