Assessable value includes buyer-supplied technical know-how, but Rule 209A penalty cannot be imposed on a company.

Technical know-how, secret processes and confidential information supplied by the buyer for consideration formed part of the manufacturing cost and had to be included in the assessable value of the medicament, so the duty demand was sustained for undervaluation and short payment of duty. Penalty under Rule 209A could not be imposed on a company because that provision applies to acts attributable to a natural person, and a juristic entity falls outside its scope. The penalty on the company was therefore set aside, while the valuation-based duty demand remained upheld.

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Issues: (i) Whether the cost of technical know-how borne by the buyer was includible in the assessable value of the medicament manufactured by the appellant. (ii) Whether penalty under Rule 209A could be imposed on a company.

Issue (i): Whether the cost of technical know-how borne by the buyer was includible in the assessable value of the medicament manufactured by the appellant.

Analysis: The medicament was manufactured using technical know-how, secret processes and other confidential information supplied by the buyer for consideration. The value of such technical know-how formed part of the cost connected with manufacture and had been omitted while arriving at the transaction value, resulting in undervaluation of the goods and short payment of duty.

Conclusion: The cost of technical know-how was includible in the assessable value, and the demand of duty was sustainable.

Issue (ii): Whether penalty under Rule 209A could be imposed on a company.

Analysis: Rule 209A contemplates penal consequences for acts that can be performed by a natural person. A company, being a juristic entity, does not fall within the scope of that provision for such penalty.

Conclusion: Penalty under Rule 209A on the company was not sustainable and was set aside.

Final Conclusion: The duty demand was sustained, while the penalty imposed on the company was set aside, leading to relief only on the penalty issue.

Ratio Decidendi: Technical know-how costs borne for manufacture are includible in assessable value when they form part of the consideration-linked manufacturing cost, and penalty provisions confined to natural persons cannot be imposed on a company.

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