Customs valuation excludes separately priced technical and licence charges unless shown to be a condition of sale.

Licence fees, engineering package charges, technical assistance and know-how payments were held not includible in the assessable value of imported equipment where the contract and invoices showed separate pricing for goods and services. The imported machinery formed only part of a larger project, and the remaining machinery and civil works were to be arranged independently by the buyer. Applying Section 14 of the Customs Act, 1962 and Rule 10(1)(c) of the Customs Valuation Rules, only amounts payable as a condition of sale of the imported goods can be added to transaction value. As no such pre-condition was shown, the disputed charges were excluded and the importer's valuation was accepted.

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Issues: Whether the licence fee, engineering package, technical assistance and know-how were includible in the assessable value of the imported equipment as part of the transaction value under customs valuation law.

Analysis: The contract and invoices showed two separately priced components, one for the supply of key equipment and another for engineering package, technical assistance and licence fee. The imported machinery was only a part of the overall project, while the remaining machinery and civil works were to be arranged independently by the buyer. No binding condition was established showing that purchase of the equipment was contingent upon payment for the technical services. Under Section 14 of the Customs Act, 1962 and Rule 10(1)(c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, only amounts payable as a condition of sale of the imported goods can be added to the transaction value. Payments for separately contracted post-importation services, where not shown to be a pre-condition for the sale of the goods, are not includible.

Conclusion: The disputed technical and licence-related charges were not includible in the assessable value and the valuation adopted by the importer was accepted.

Final Conclusion: The appeal succeeded and the impugned valuation was set aside, with confiscation and penalty rendered unnecessary for adjudication.

Ratio Decidendi: Separate and independently priced technical services or licence payments are not includible in the assessable value unless they are proved to be a condition of sale of the imported goods.

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