Customs valuation of imported software licence fees: composite payments were includible, and the reproduction-charge exclusion did not apply.

For customs valuation of imported software, a composite countrywide licence fee was held includible in transaction value because it formed part of the price actually paid for supply and permitted use in India. The exclusion for charges for the right to reproduce did not apply, as the payment was not for an unfettered reproduction right but for the scope of authorised use. The later detailed invoice could not replace the customs-attested invoice, and the refund claim failed because the assessable value was not shown to be wrong.

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Issues: Whether the countrywide licence fee paid for imported software was includible in the customs assessable value under the valuation rules, or excluded as charges for the right to reproduce the software in India.

Analysis: The agreement and invoices showed that the importer paid a single composite licence fee for supply and use of the software in India, with the countrywide component reflecting the extent of permitted use rather than a separate charge for an unfettered right to reproduce. The Tribunal held that the transaction value was the total price actually paid or payable for the imported software, and that the exclusion for charges for the right to reproduce did not apply because the payment was not made for an absolute reproduction right. The Tribunal also held that the attempted substitution of the original customs-attested invoice with a later detailed invoice was unsupported, and the refund claim did not establish that the assessable value had been wrongly taken.

Conclusion: The countrywide licence fee was held includible in the assessable value, and the refund claim failed.

Final Conclusion: The impugned assessment and rejection of refund were upheld because the full invoice amount represented the transaction value of the imported software, not an excludable reproduction charge.

Ratio Decidendi: For customs valuation, a payment described as a software licence fee is includible in transaction value when it represents the price actually paid for the imported goods and the permitted scope of use, and the exclusion for reproduction charges applies only to an actual charge for an unfettered right to reproduce the goods.

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