Customs valuation and royalty inclusion depend on actual payment, not a contract clause alone.

Under the Customs Valuation Rules, 2007, royalty is includible in assessable value only if it was in fact paid by the importer to the foreign collaborator as a condition of sale of the imported goods. On the importer's assertion that no royalty was actually paid, includability could not be determined merely from the contractual clause. The assessment therefore had to be finalised only after verifying the factual position on royalty payment.

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Issues: Whether royalty could be added to the assessable value for customs valuation when the appellant asserted that no royalty was actually paid under the agreement.

Analysis: Addition to assessable value under the Customs Valuation Rules, 2007 was held to depend on whether royalty had in fact been paid by the importer to the foreign collaborator as a condition of sale of the imported goods. On the appellant's assertion that no royalty was paid at all, the question of includability of royalty did not survive until the factual position was verified. The assessment was therefore required to be finalised after verification of whether any royalty payment had been made.

Conclusion: Royalty could not be added merely on the basis of a contractual clause; the matter was sent back for factual verification before finalisation of assessment.

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