Customs valuation excludes royalty and training charges tied to Indian manufacturing, not to imported goods.

Royalty for technical know-how and remuneration for training were held not to form part of the assessable value of imported goods because the payments related to manufacturing activities in India, not to the imported trading goods. Under customs valuation rules, royalty or licence fees are includible only when they are related to the imported goods and are a condition of sale. On that basis, the enhancement of value was unsustainable.

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Issues: Whether royalty paid for technical know-how and remuneration paid for training, incurred for manufacturing activities in India, were includible in the assessable value of the imported goods under the customs valuation rules.

Analysis: Rule 10(1)(c) permits addition of royalty and licence fees only where such payment is related to the imported goods and is required as a condition of sale. The record showed that the technology licence and training were connected with manufacture in India and had no nexus with the imported trading goods. The provision was applied in the light of the principle that royalty or technical know-how charges are includible only when they constitute a pre-condition for supply of the imported goods.

Conclusion: The royalty and training remuneration were not includible in the assessable value of the imported goods, and the enhancement of value was unsustainable.

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