Import valuation must include licence fee royalty; mis-declaration sustained, but fine and penalty were reduced.

Licence fee or royalty payable under an import licence agreement was treated as part of the transaction value because the declared invoice value did not include that component and no evidence showed it was properly intimated for declaration at import. The enhanced assessable value was therefore upheld. Mis-declaration of value was also sustained, so confiscation and penalty were maintained, but the redemption fine and penalty were reduced in view of the limited duty difference arising from the value enhancement.

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Issues: (i) whether the licence fee/royalty payable under the import licence agreement was includible in the assessable value of the imported goods under the valuation rules; (ii) whether the goods were liable to confiscation and penalty for mis-declaration of value, and whether the redemption fine and penalty were required to be reduced.

Issue (i): Whether the licence fee/royalty payable under the import licence agreement was includible in the assessable value of the imported goods under the valuation rules.

Analysis: The declared invoice value did not reflect the licence fee payable for the imported programmes. The importer had a responsibility to ensure that the exporter and courier were informed of the correct value components to be reflected in the import documents. In the absence of evidence that the licence fee was intimated for inclusion, the declared value could not be accepted as complete for valuation purposes.

Conclusion: The licence fee was includible in the assessable value and the enhanced valuation was upheld.

Issue (ii): Whether the goods were liable to confiscation and penalty for mis-declaration of value, and whether the redemption fine and penalty were required to be reduced.

Analysis: Mis-declaration of value was sustained because the importer failed to establish proper communication of the licence fee component for declaration at the time of import. However, considering the limited duty difference arising from the enhancement of value, the amounts of redemption fine and penalty required moderation.

Conclusion: Confiscation and penalty were upheld, but the redemption fine and penalty were reduced.

Final Conclusion: The appeal succeeded only to the extent of reduction in the redemption fine and penalty, while the finding of mis-declaration, confiscation, and enhancement of assessable value was maintained.

Ratio Decidendi: Where import value is declared without including a payable licence fee integral to the transaction, the omitted amount is includible in assessable value and mis-declaration may sustain confiscation and penalty, though the quantum of fine and penalty may be reduced on the facts.

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