Post-import technical know-how fee excluded from import value, defeating duty demand, redemption fine and penalty

A lump sum technical know-how fee paid under a post-import technology transfer arrangement was not includible in the assessable value of imported goods because the agreement covered design, drawings, training and erection assistance for an instant coffee plant, rather than the imported machinery itself. The arrangement did not require exclusive import of machinery from the overseas supplier, and the imported components formed only part of the broader project. Applying the Supreme Court's comparable valuation reasoning, the contrary view was treated as factually distinguishable. As the know-how fee was not part of import value, the consequential duty demand, redemption fine and penalty had no sustainable basis.

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Issues: Whether the lump sum technical know-how fee paid to the overseas supplier was includible in the assessable value of the imported goods, and whether the differential duty, redemption fine and penalty could survive if the loading of value was unsustainable.

Analysis: The technical know-how agreement was directed to design, drawings, technical information, training, assistance in erection and performance of an instant coffee plant, and was found to relate to a post-importation technology transfer arrangement rather than to the imported machinery itself. The agreement did not require importation of machinery exclusively from the supplier, and the imported components constituted only a part of the overall project. The reasoning of the Supreme Court in the comparable valuation dispute was followed, and the earlier contrary reliance was held distinguishable on facts. Once the know-how fee was held not to be part of the import value, the foundation for the duty demand and the associated confiscation-based consequences disappeared.

Conclusion: The technical know-how fee was not addable to the value of the imported goods. The duty demand failed, and the redemption fine and penalty were also unsustainable.

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