Customs valuation excludes royalty absent nexus with imported goods; declared value restored for raw material imports.

Royalty paid under a technical know-how arrangement for manufacture of finished goods could not be loaded into the customs value of imported raw materials where the agreement did not require purchase of inputs only from the foreign collaborator and no evidence showed that import of the raw materials was conditioned on royalty payment. In the absence of a direct nexus between the royalty and the imported goods, the customs valuation provisions did not permit inclusion of the royalty in assessable value. The declared valuation was therefore restored and the loading of royalty was held impermissible.

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Issues: Whether royalty paid to the foreign collaborator was liable to be loaded into the value of imported raw materials for customs valuation.

Analysis: The agreement was a technical know-how arrangement concerning manufacture of finished goods. It did not impose any restriction requiring procurement of raw materials only from the collaborator, and no evidence was produced to show that the import of raw materials was conditioned on payment of royalty. In the absence of a nexus between the royalty and the imported goods, the royalty could not be added to the assessable value under the customs valuation provisions.

Conclusion: The loading of royalty into the value of the imported goods was not permissible and the adjudication order restoring the declared valuation was upheld.

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