Post-import engineering service fees not part of customs assessable value when not linked to sale of imported goods

Fee paid under an engineering services agreement for project engineering, product engineering, training, plant set-up and commissioning was not includible in the customs assessable value of imported goods because it was not shown to be a condition of sale or linked to any transfer of technology, know-how or licence. The agreement, read as a whole, covered post-importation services for setting up and operating the plant in India, with no direct nexus to the imported die set and printer. On that basis, the service fee could not form part of the price of the imported goods, and exclusion of the amount from assessable value was upheld.

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Issues: Whether fee paid under an engineering service agreement for project engineering, product engineering, training, and plant set-up and commissioning was includible in the assessable value of imported goods as a condition of sale or technical know-how fee.

Analysis: The fee was not shown to be linked to the sale of the imported die set and printer, nor was there evidence of transfer of technology, patents, know-how, or any licence making the import of the goods conditional upon payment of the amount. The agreement, read as a whole, related to services for setting up, commissioning, and operating the plant in India, which were post-importation activities. The legal principles applied in the earlier Supreme Court decisions on customs valuation required a direct nexus with the imported goods and a sale-condition payment before inclusion in the customs assessable value. On the facts, the service fee was separately referable to post-import services and could not be treated as part of the price of the imported goods.

Conclusion: The amount was not includible in the assessable value, and the order excluding it was correct; the Revenue's appeal failed.

Ratio Decidendi: Payments for technical or engineering services that are independently contracted for post-importation set-up, commissioning, or operation of a plant, and are not a condition of sale of the imported goods, are not includible in the customs assessable value.

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