2005 (3) TMI 655 - AT - Customs

Summary

Issues:
Whether technical know-how fee is includible in the value of imports under Rule 9(1)(c) of the Customs Valuation Rules, 1988.

Analysis:
The appeal concerned the inclusion of a technical know-how fee in the assessable value of imports under Rule 9(1)(c) of the Customs Valuation Rules, 1988. The collaboration agreement between the appellant and a foreign collaborator specified the manufacture of contract products based on technical know-how. The appellant argued that the fee paid had no nexus with the imported goods, citing relevant case laws. The Revenue contended that the fee was linked to the imported products, as per the collaboration agreement. The Tribunal analyzed Rule 9(1)(c) which allows adding royalties and fees related to imported goods if paid as a condition of sale. It concluded that the technical know-how fee should be related to the imported goods and paid as a condition of sale. In this case, the fee was for manufacturing contract products, not the imported goods (Models and Moulds), and was not a condition for their purchase. The Tribunal found no strong case for the Revenue, allowed the appeal, and pronounced the order accordingly.

This judgment highlights the importance of establishing a direct nexus between technical know-how fees and imported goods for inclusion in the assessable value. The Tribunal emphasized that such fees must be a condition of sale for the imported goods to be considered under Rule 9(1)(c). The decision also underscores the significance of analyzing collaboration agreements and relevant clauses to determine the relationship between fees and imported products. By referencing pertinent case laws, the Tribunal reinforced the principle that technical know-how fees should influence the pricing or be a condition for the sale of the imported goods to warrant inclusion in the assessable value. The judgment provides clarity on the interpretation and application of Rule 9(1)(c) in customs valuation cases involving technical know-how fees, ensuring a consistent and reasoned approach in such matters.