Customs valuation of licence fees: technology-linked payments not includible in import value absent a condition of sale.

The licence fee payable under a technology agreement was not required to be added to the transaction value of imported components for customs duty purposes because it was linked to technology use for manufacture and assembly, not to the purchase of the goods as such. The valuation rules still required the payment to be a condition of sale of the imported goods, and no material established that this condition was met. The explanation to Rule 10(1)(c) of the Customs Valuation Rules, 2007 did not remove that requirement. Earlier decisions in the same assessee's case and later valuation rulings were followed, while a cited authority was distinguished on its facts.

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Issues: Whether the licence fee payable under the technology agreement was required to be added to the transaction value of the imported components for customs duty assessment.

Analysis: The dispute turned on whether the licence fee was related to the imported goods and whether it was a condition of sale within the meaning of the valuation rules. The agreement showed that the licence fee was payable for each WTG commissioned and was linked to the use of technology for manufacture and assembly, not to the purchase of the imported components as such. The explanation added to Rule 10(1)(c) of the Customs Valuation Rules, 2007 does not dispense with the requirement that the payment must be a condition of sale of the imported goods. On the facts, no material established that the licence fee was such a condition. The earlier decisions in the respondent's own case and the later valuation rulings were followed, and the cited authority on a different factual setting was distinguished.

Conclusion: The licence fee was not includible in the transaction value of the imported goods, and the departmental appeal failed.

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