Customs valuation excludes royalty and technical fees unless shown to be a condition of sale for imported goods.

Royalty, licence fee and technical assistance charges under related agreements are not includible in the assessable value of imported goods unless the department establishes that they are payable, directly or indirectly, as a condition of sale under Rule 10(1)(c) of the Customs Valuation Rules, 2007. On the facts examined, the record did not show that the royalty per vehicle, royalty on spare parts, or the technical assistance and training fee formed part of the sale conditions for the imports. In the absence of that nexus, the declared transaction value could not be enhanced by adding those amounts.

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Issues: Whether royalty, licence fee and technical assistance charges under the related agreements were includible in the assessable value of the imported goods under the Customs Valuation Rules, 2007 as amounts payable as a condition of sale.

Analysis: The department sought addition of royalty and related payments under Rule 10(1)(c) of the Customs Valuation Rules, 2007 on the footing that the payments were linked to the imported goods. The agreements were examined to see whether the impugned sums were payments the buyer was required to make, directly or indirectly, as a condition of sale of the imported goods. The material on record did not establish that the royalty of 100 Euros per vehicle, the royalty at 2% on spare parts, or the technical assistance and training fee were conditions attached to the sale of the imported goods. In the absence of such nexus, the amounts could not be added to the declared transaction value.

Conclusion: The amounts were not includible in the assessable value and the enhancement of value was unsustainable.

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