Technical know-how fees are not part of imported machinery value unless they are consideration for the goods or a sale condition.

Technical know-how fees paid under a collaboration agreement for plant setup, designs, training and manufacturing assistance are not automatically includible in the assessable value of imported capital goods. The fee can be added only if it is shown to be consideration for the imported machinery itself or a condition of sale of those goods. Where the agreement leaves the buyer free to source machinery elsewhere and the know-how relates to manufacture in India rather than to the imported goods, valuation inclusion is unsustainable.

---

---

Issues: Whether the technical know-how fee payable under the collaboration agreement was includible in the assessable value of the imported capital goods, and whether such payment formed a condition of sale of the imported goods.

Analysis: The technical collaboration agreement was for supply of technical know-how, layouts, specifications, designs, training, and assistance for manufacture of precision castings in India. The agreement did not establish that the know-how fee was relatable to the imported capital goods themselves or that it represented consideration for the imported machinery. The foreign collaborator was to supply plant and machinery only if required, which left the appellant free to procure capital goods from other sources. Therefore, the fee could not be treated as an additional payment made as a condition of sale of the imported goods, nor could it be added under the valuation provisions governing inclusions in the assessable value. The cited precedents supported the view that technical know-how connected with setting up or running the factory is not automatically includible in the value of imported capital goods.

Conclusion: The technical know-how fee was not includible in the assessable value of the imported capital goods, and the addition made to the declared value was unsustainable.

Ratio Decidendi: Technical know-how payable for manufacture and plant setup in India is not includible in the assessable value of imported capital goods unless it is shown to be consideration for the imported goods or a condition of their sale.

---