Royalty for manufactured products, not imported components, is excluded from customs assessable value under Rule 10(1)(c).

Royalty or lump sum technical know-how payments are includible in the assessable value of imported goods under Rule 10(1)(c) only if they are related to the imported goods and payable, directly or indirectly, as a condition of their sale. Where the royalty is payable on the sale of manufactured products, and the agreement excludes standard bought-out components and the landed cost of imported components from the royalty base, it is not a condition of sale of the imported goods. On unchanged facts, the earlier Tribunal view that the royalty was unrelated to the imports governed the dispute, while Revenue's cited precedent was distinguished on its own facts.

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Issues: Whether royalty or lump sum technical know-how payments were includible in the assessable value of imported components under Rule 10(1)(c) of the Customs Valuation Rules, 2007.

Analysis: The royalty under the agreement was payable on the sale of the manufactured products, not on the import of components. The royalty computation expressly excluded the cost of standard bought-out components and the landed cost of imported components, irrespective of source of procurement. On the identical facts for the earlier period, the Tribunal had already held that the royalty was not related to the imported goods and had accepted the transaction value. Since the agreement and factual matrix were unchanged, the earlier decision governed the present dispute. The precedent relied upon by the Revenue was distinguished because, on its facts, royalty formed part of the sale condition of the finished goods.

Conclusion: The royalty was not a condition of sale of the imported goods and was not includible in their assessable value; the Revenue's challenge failed.

Ratio Decidendi: Royalty is includible under Rule 10(1)(c) only when it is related to the imported goods and is payable, directly or indirectly, as a condition of their sale; payments linked only to manufacture or sale of finished goods, and computed by excluding imported components, are not includible in assessable value.

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