Technical know-how fee and customs valuation: no inclusion absent nexus with imported machinery or condition of sale.

A lump-sum technical know-how or licence fee is includible in the assessable value of imported machinery under Rule 9(1)(c) only where there is a direct or indirect nexus with the imported goods and the amount is payable as a condition of sale. On the facts stated, the licence fee related to technical know-how for licensed products, and those products did not include the machinery imported. No material showed that the fee was linked to the machinery or was a condition precedent to its sale. The fee was therefore not added to the assessable value of the imported goods, and the issue was decided for the assessee.

---

---

Issues: Whether the lump-sum technical know-how/licence fee was includible in the assessable value of the imported machinery under Rule 9(1)(c) of the Customs Valuation Rules, 1988.

Analysis: Inclusion under Rule 9(1)(c) requires a direct or indirect nexus between the payment and the imported goods, and the amount must be payable as a condition of sale. The terms of the licence agreement showed that the fee was paid for technical know-how relating to licensed products, and the licensed products did not include machinery. No material established that the fee was payable in relation to the imported machinery or as a condition precedent to its sale. In the absence of evidence showing such connection, the know-how fee could not be added to the price of the imported goods.

Conclusion: The technical know-how fee was not includible in the value of the imported machinery, and the issue was decided in favour of the assessee.

---