Technical know-how fee linked to manufacture forms part of assessable value for central excise purposes.

Technical know-how fee paid to a foreign collaborator is includible in the assessable value for central excise when it is linked to product planning, quality control, standard maintenance and marketability. The Tribunal applied the principle that expenditure having a nexus with manufacture and contributing to the value of excisable goods up to the stage of removal forms part of assessable value. On that basis, the fee was treated as manufacturing-related expenditure rather than a post-manufacturing selling expense, and the departmental appeal succeeded.

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Issues: Whether technical know-how fee paid to a foreign collaborator is includible in the assessable value for central excise purposes.

Analysis: The fee was found to be linked to the planning of the product, maintenance of quality and standard, and improvement of marketability. The Tribunal applied the principle that expenses contributing to the value of excisable goods up to the stage of removal, including charges which enhance marketability and have a nexus with manufacture, form part of the assessable value. The technical know-how payment was treated as a manufacturing-related expenditure and not merely a post-manufacturing selling expense.

Conclusion: The technical know-how fee is includible in the assessable value and the issue is decided against the assessee.

Final Conclusion: The order of the lower appellate authority was set aside and the departmental appeal succeeded, with the technical know-how fee forming part of the excisable value.

Ratio Decidendi: Expenditure on technical know-how that is incurred to improve quality, standard and marketability of excisable goods, and that has a nexus with manufacture, is includible in the assessable value.

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