Customs valuation: shareholding alone does not create related persons, and royalty for technical assistance is not added to assessable value.

Shareholding alone does not establish a related-person relationship for customs valuation between an Indian importer and a foreign collaborator, and declared transaction value cannot be disregarded on that basis. Royalty or licence fee paid under a technological agreement is includible in the assessable value only when it is payable in relation to the imported goods; payments tied instead to manufacture in India and technical assistance are outside the customs assessable value. On that reasoning, the valuation orders were unsustainable and the importer was entitled to relief.

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Issues: (i) Whether the importing company and the foreign collaborator could be treated as related persons for customs valuation purposes on the basis of shareholding. (ii) Whether royalty or licence fee paid under the technological agreement was includible in the assessable value under the customs valuation rules.

Issue (i): Whether the importing company and the foreign collaborator could be treated as related persons for customs valuation purposes on the basis of shareholding.

Analysis: Shareholding by a foreign company in the Indian importer, by itself, does not establish a related-party relationship for customs valuation. The record did not disclose any legal basis to disregard the declared transaction value merely on that ground.

Conclusion: The parties could not be treated as related persons on the basis of shareholding alone, and the finding to that effect was unsustainable.

Issue (ii): Whether royalty or licence fee paid under the technological agreement was includible in the assessable value under the customs valuation rules.

Analysis: Amounts paid under the technological agreement related to manufacture of goods in India and technical assistance, not to the imported machinery or tools. Since the payment was not shown to be made in respect of the imported goods, it could not be added to the customs assessable value under the valuation rule governing royalties and licence fees.

Conclusion: Royalty or licence fee under the agreement was not includible in the assessable value of the imported goods.

Final Conclusion: The valuation orders were unsustainable and the importer was entitled to relief.

Ratio Decidendi: Shareholding alone does not make the importer and foreign supplier related persons for customs valuation, and royalty or licence fee is includible only when it is payable in relation to the imported goods.

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