Customs valuation loading fails where alleged know-how fee is not proved to be a condition of sale.

Enhancement of the assessable value by loading 14.8% towards alleged commission or know-how fee was unjustified because the records did not show that any such payment was a condition of sale of the imported goods. The project import arrangement and contractual documents indicated that the supply of goods for manufacture of Z Blocks flowed through the existing contractual structure, but no direct sale of finished goods or clear linkage between the imported goods and the alleged fee was established. Value addition under the Customs Valuation Rules cannot stand on assumption alone; the appellate loading was therefore set aside.

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Issues: Whether the enhancement of assessable value of the imported goods by loading 14.8% on account of commission or know-how fee was justified.

Analysis: The imported goods were brought in under project imports for use in manufacture of Z Blocks under the contractual arrangement between the foreign supplier and the Indian importer. The agreement and letter of intent showed that the supply to the project flowed through the existing contractual structure, and the records did not establish any direct sale of finished goods or clear evidence that the alleged know-how fee was a condition of sale of the imported goods. The lower appellate authority did not adequately examine or displace the findings recorded by the adjudicating authority, but proceeded to load the value on a broad assumption under Rule 9(1)(e) of the Customs Valuation Rules.

Conclusion: The loading of value by the lower appellate authority was not justified and was rightly set aside.

Ratio Decidendi: Addition to the assessable value under the valuation rules is unsustainable unless the alleged payment is shown to be a condition of sale of the imported goods on the evidence of the contractual arrangement.

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