Technical licence fee excluded from customs assessable value where it was not tied to the imported goods or their sale.

A lump sum technical licence fee paid to a foreign supplier was held not to form part of the assessable value of imported capital goods under the Customs Valuation Rules. The fee related to technical information and the manufacture of contract products in India, not to the imported goods themselves, and there was no material showing that payment of the fee was a condition of sale of those goods. As the statutory requirements for inclusion in transaction value were not met, the fee was excluded from assessable value and the issue was decided in favour of the assessee.

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Issues: Whether the lump sum technical licence fee paid to the foreign supplier was includible in the assessable value of the imported capital goods under Rule 9(1)(c) read with Rule 4(1) of the Customs Valuation Rules.

Analysis: The imported goods were capital goods for manufacture in India, while the technical information and licence fee related to the contract products to be manufactured using those goods. The payment was for supply of technical information and not for the imported goods themselves. There was no material to show that the fee was related to the imported goods or that payment of the licence fee was a condition of sale of such goods. Since the statutory conditions for adding the amount to the transaction value were not satisfied, the fee could not be included in the assessable value.

Conclusion: The lump sum technical licence fee was not includible in the assessable value of the imported goods and the issue is decided in favour of the assessee.

Ratio Decidendi: A royalty or technical licence fee is includible in the assessable value only when it is related to the imported goods and payable as a condition of their sale.

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