Royalty and technical know-how fees excluded from assessable value where they were not a condition of sale.

Royalty and technical know-how fees are includible in the assessable value of imported goods only where they relate to the goods and are payable as a condition of sale. On the facts described, the collaboration agreement and the import transaction were independent commercial arrangements, the importer was free to source goods from other suppliers, and no material showed that the royalty affected the price of the imports. The lower authority's loading was also unsustainable because it did not adhere to the remand directions or give reasons linking the fees to transaction value, and new grounds could not be added at the appellate stage. Accordingly, the fees were held not includible in assessable value.

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Issues: Whether royalty and technical know-how fees paid under the collaboration agreement were includible in the assessable value of the imported goods under Rule 9(1)(c) of the Customs Valuation Rules, 1998.

Analysis: The loading of value can be sustained only if the royalty or licence fee is related to the imported goods and is payable as a condition of sale. On the facts found, the collaboration agreement and the import transaction were independent commercial arrangements. The importer was free to source the goods from any supplier, and no material was brought to show that the royalty payment influenced the price of the imported goods. The lower authority also failed to confine itself to the remand directions and simply added the royalty and technical know-how fee without recording reasons showing how the transaction value was affected. New grounds could not be introduced at the appellate stage to justify the loading.

Conclusion: Royalty and technical know-how fees were not includible in the assessable value, and the Revenue's challenge to deletion of the loading failed.

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