Indispensable supplier-provided software must be valued with imported hardware, triggering customs duty recovery and penalty for omission.

Software licences downloaded separately from imported hardware locks are includible in the customs assessable value where they are supplier-provided, customised to each lock, and indispensable for activation and functioning. Although delivered electronically, the hardware and software constitute integral components of a single imported product for transaction-value assessment. Where the importer knew the software's nature and value but omitted it from the declared assessable value, and sent purported download intimations to an incompetent authority, the omission results in customs duty evasion. The extended limitation period, differential duty demand, and penalty consequently apply.

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Issues: (i) Whether the value of software licences downloaded separately for imported hardware locks is includible in the assessable value of the imported hardware; (ii) Whether invocation of the extended period and imposition of penalty for non-inclusion of the software value were sustainable.

Issue (i): Whether the value of software licences downloaded separately for imported hardware locks is includible in the assessable value of the imported hardware.

Analysis: Section 14 requires assessment on the transaction value, subject to the applicable valuation rules. The hardware locks and the software licences were purchased from the same supplier, each licence was customised and specific to its corresponding hardware lock, and the hardware could not be activated or function without the downloaded software. The hardware and software therefore constituted integral components of a single imported product notwithstanding their separate delivery through internet download.

Conclusion: The value of the downloaded software licences is includible in the assessable value of the hardware locks, against the assessee.

Issue (ii): Whether invocation of the extended period and imposition of penalty for non-inclusion of the software value were sustainable.

Analysis: The importer knew the nature and value of the software associated with the hardware locks but did not include that value in the declared assessable value. The purported intimations of software downloads were sent to an authority not competent to receive them. The resulting non-inclusion led to evasion of customs duty.

Conclusion: Invocation of the extended period, confirmation of differential customs duty, and imposition of penalty were sustained, against the assessee.

Final Conclusion: The hardware locks and their indispensable, supplier-provided software licences are to be valued together for customs assessment, and the undervaluation consequences validly follow.

Ratio Decidendi: Where separately supplied software is indispensable, product-specific, and sourced from the same supplier as imported hardware, its value forms part of the transaction value of the imported goods.

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