Customs valuation accepted on invoice price where technology payment was separate and no nexus with import price was proved.

Invoice value for imported CKD packs and components was accepted under Section 14(1)(a) of the Customs Act, 1962 because the parties dealt at arm's length and there was no material showing that the buyer and seller had any mutual interest or that the declared price was not the true price. The collaboration agreement for technical know-how and the supply contract for goods were treated as independent commercial transactions, and no nexus was shown between the lump sum technology payment and the price of the imported goods. The revenue therefore failed to prove that the invoice value was not the sole consideration for sale, so rejection of the declared value and resort to Section 14(1)(b) and Rule 8 of the Customs Valuation Rules, 1963 were not justified.

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Issues: Whether the invoice price of imported CKD packs and components could be accepted under Section 14(1)(a) of the Customs Act, 1962, or whether the revenue was justified in rejecting it and resorting to Section 14(1)(b) of the Customs Act, 1962 and Rule 8 of the Customs Valuation Rules, 1963 on the footing that the lump sum collaboration payment formed part of the price.

Analysis: The parties dealt with each other at arm's length and there was no material to show that the seller and buyer had any interest in the business of each other or that the invoice price was not the true price. The collaboration agreement for technical know-how and the later supply of CKD packs and spares were treated as independent commercial transactions. The agreement did not show any nexus between the lump sum payment for technology and the price of the imported goods, nor was there evidence that the invoice price was fixed by taking the lump sum royalty into account. In such circumstances, the apparent contractual arrangement was accepted as reflecting the real position, and the revenue failed to establish that the invoice value was not the sole consideration for the sale.

Conclusion: The invoice value had to be accepted for assessment under Section 14(1)(a), and invocation of Section 14(1)(b) and Rule 8 was not justified. The challenge by the revenue failed.

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