Customs valuation of imported plant turns on whether collaboration payments are linked to the goods or are post-importation services.

Amounts payable under a collaboration agreement are includible in customs valuation when they are intrinsically linked to the imported plant or operate as a condition of sale. On that basis, payments for know-how and documentation, performance guarantee, and restrictive covenant were included in the assessable value. By contrast, training after installation, commissioning, post-commencement testing, vaguely described updates, and R&D facility charges were treated as post-importation or unrelated services and excluded from valuation. The assessment was revised accordingly, with only the collaboration-related payments retained in the assessable value.

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Issues: (i) Whether the amounts payable under the collaboration agreement for supply of know-how and documentation, guarantee of performance, and restrictive covenant were includible in the assessable value of the imported plant; (ii) Whether the charges for training, commissioning, testing, installation-related know-how, updates and R&D facility were includible in the assessable value.

Issue (i): Whether the amounts payable under the collaboration agreement for supply of know-how and documentation, guarantee of performance, and restrictive covenant were includible in the assessable value of the imported plant.

Analysis: The payment for know-how and documentation related to making the plant functional and formed part of the value attributable to the imported plant. The amount referable to performance guarantee under the know-how supply was also connected with the supply arrangement and was admissible for inclusion. The restrictive covenant under the agreement operated as a condition attached to the sale arrangement and attracted inclusion in valuation under the customs valuation framework.

Conclusion: These amounts were held includible in the assessable value, in favour of Revenue.

Issue (ii): Whether the charges for training, commissioning, testing, installation-related know-how, updates and R&D facility were includible in the assessable value.

Analysis: Training after installation and commencement of production, commissioning services, post-commencement testing, vaguely described updates not shown to relate to pre-installation value, installation-related know-how, and R&D facility charges were treated as post-importation or extraneous to the import of the plant. Such charges were not shown to form part of the price of the imported machinery and were therefore outside the assessable value.

Conclusion: These charges were held not includible, in favour of the assessee.

Final Conclusion: The valuation was revised by including only the specified collaboration-related payments while excluding the remaining service components, and the revenue appeal succeeded only to that extent.

Ratio Decidendi: Amounts paid under a collaboration agreement are includible in customs valuation only where they are intrinsically linked to the imported goods or constitute a condition of sale, whereas charges for post-importation services or activities unconnected with the import are not includible.

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