Royalty under technical know-how agreement not added to import value absent proof it was a condition of sale.

Royalty paid under a technical know-how agreement was held not to form part of the assessable value of imported raw materials and components because the agreement did not require the importer to source goods exclusively from the overseas know-how supplier. The record did not establish that the royalty was a condition of sale of the imported goods, and without that restrictive nexus, loading the royalty into assessable value was not justified. The first appellate authority's order was therefore unsustainable.

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Issues: Whether royalty paid under a technical know-how agreement was includible in the assessable value of imported raw materials and components.

Analysis: The agreement did not show any condition that the importer was bound to procure components or raw materials only from the overseas know-how supplier. The royalty was paid for technical know-how and the record did not establish that it formed a condition of sale of the imported goods. In the absence of such a restrictive nexus, the loading of royalty into the value of the imported goods was not justified.

Conclusion: Royalty was not includible in the assessable value of the imported goods; the order of the first appellate authority was unsustainable.

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