Customs valuation excludes technical services charges unless they form part of the imported goods' sale value or a permitted addition.

Technical services charges under a technical supply agreement were not includible in the assessable value of imported machinery under the Customs (Valuation) Rules, 1988. Charges for engineering, supervision, commissioning support, training and plant-operating assistance are not automatically part of customs value unless they form part of the imported goods' sale value or are otherwise a legally permissible addition under the valuation rules. The earlier Supreme Court ruling relied on only supported inclusion of amounts directly connected with preparing imported goods for delivery, not broader consultancy or project services. On the facts, only a process licence for a sponge iron plant could have been relevant, but that plant was never imported.

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Issues: Whether the technical services charges payable under the technical supply agreement were includible in the assessable value of the imported machinery under the Customs (Valuation) Rules, 1988.

Analysis: The charges in question related to engineering, supervision, commissioning support, training and assistance for setting up and operating the plant. The Rule governing customs valuation permits addition only of those amounts that are legally includible in the value of imported goods. Charges payable for technical services connected with the plant as a whole, or for making the plant operational, are not automatically includible unless they form part of the value of the imported goods or are payable as a condition of their sale. The earlier Supreme Court decision relied upon only supported inclusion of amounts directly connected with the imported plant, such as dismantling and making the plant ready for delivery, and did not justify adding consultancy or engineering services unrelated to the imported machinery's sale value. On the facts, only amounts referable to a process licence for the sponge iron plant could have been considered, but that plant was never imported.

Conclusion: The technical services charges were not includible in the assessable value of the imported goods, and the addition made by the department was unsustainable.

Ratio Decidendi: Under customs valuation law, technical consultancy or project services are not includible in the assessable value of imported goods unless they are part of the imported goods' sale value or are a legally permissible addition under the valuation rules.

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