Software import valuation: importer status, licence fee inclusion, and extended limitation upheld in customs dispute.

Software imported through DHL was treated as an import made for and on behalf of the appellant because the goods were ordered by the appellant, supplied directly from abroad, and delivered to it. The licence fee paid under the same commercial arrangement was held includible in the assessable value, as payment routed through an Indian subsidiary did not exclude the portion remitted to the foreign supplier from transaction value. The demand was also held within limitation because the undervaluation and the actual import arrangement supported suppression of material facts. The customs valuation, demand, and penalties were sustained.

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Issues: (i) whether the appellant was the importer and liable to pay customs duty on the software imported through DHL, (ii) whether the licence fee paid to the Indian subsidiary of the foreign supplier was includible in the assessable value of the imported software, and (iii) whether the demand was barred by limitation.

Issue (i): whether the appellant was the importer and liable to pay customs duty on the software imported through DHL.

Analysis: The software was supplied directly from the foreign supplier to the appellant, the goods were ordered by the appellant, and DHL filed the bill of entry and delivered the software to the appellant. Even if no separate authorization was produced for DHL, the transaction showed that the import was made for and on behalf of the appellant. These facts established the appellant as the importer for customs purposes.

Conclusion: The appellant was correctly treated as the importer and was liable to customs duty.

Issue (ii): whether the licence fee paid to the Indian subsidiary of the foreign supplier was includible in the assessable value of the imported software.

Analysis: The appellant had entered into the licence arrangement and paid the full licence fee, while the software was shipped from abroad under the same commercial arrangement. Following the settled principle applied in the earlier software-import valuation decision relied upon by the Tribunal, the portion of the fee remitted to the foreign supplier formed part of the transaction value of the imported software and could not be excluded merely because the payment was routed through the Indian subsidiary.

Conclusion: The licence fee was rightly included in the assessable value and the demand based on undervaluation was sustainable.

Issue (iii): whether the demand was barred by limitation.

Analysis: The appellant was aware that the software was being supplied from abroad, yet the value declared in the bill of entry was only nominal compared with the amount actually paid under the arrangement. The record therefore supported suppression of material facts, and the extended limitation was available to the department.

Conclusion: The demand was not barred by limitation.

Final Conclusion: The valuation adopted by the department was upheld, the customs demand and penalties were sustained, and the appeal failed.

Ratio Decidendi: In a software import routed through an Indian subsidiary, the importer is the person for whose benefit the goods are ordered and delivered, and the licence fee remitted to the foreign supplier forms part of the assessable value when it is part of the import transaction.

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